SIEPR Policy paper No. 01-015
The Economics of Baseball Contraction
Roger G. Noll
January 2002
Revised March 2003

In 2001, baseball announced plans to fold two teams. This essay examines the economics of contraction, including its effects on economic welfare and the incentives of remaining teams. Using baseball financial data, all teams are found to have a positive social benefit, but the remaining teams are estimated to benefit by over $1 billion from contracting the two weakest teams.

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