Question

In the United States, major league baseball is exempt from antitrust laws. Before 1975, the baseball team owners agreed to hold an annual draft of amateur baseball players. Once the players were drafted and signed by a team, they were effectively tied to that team for life. This allowed baseball owners to operate like ________ in the market for player services.

Answer 1

Answer: monopsonistic cartel

Explanation: A monopsony is defined as labor market in which there is only one buyer demanding labor. It is a market situation in which there is only one buyer for a product or service. There are three defining characteristics of a monopsony which include a single buyer buying all output in a market, no existence of alternative buyers, and restrictions on entry into the industry. Monopsony status of baseball owners is attributable to their ability to influence the factor market. In other words, a collegiate athlete who on signing with a team would have difficulty "working" elsewhere should he decide to exit the team.

Answer 2

Oligopsony (oligopoly of demand)

Step-by-step explanation:

The supply in the baseball player are the amateur player

while the demand are the baseball teams.

They act like oligopoly of demand, which is oligopsony.

They can dictate the terms of contract (draft) and duration. They impose their condition to the supply, which is forced t ogo into one of the teams.