Market Power

Musings by an academic economist on the power of markets and the power over markets.

Wednesday, January 26, 2005

Tyler Cowen on Labor Unions

Tyler Cowen at Marginal Revolution has this piece on why labor unions are declining in the US. His last comment:

It remains a puzzle to me why unions are so strong in Hollywood, ....

I don't know about Hollywood, but he doesn't mention how ubiquitous labor unions are in Major League Sports (one of the commenters to the piece mentions this). Professional sports leagues, especially baseball, provide interesting studies of how labor unions form. On one hand, you've got an industry made up of a few firms with a lot of monopoly power in their local markets, so there are rents available for unionized workers to capture. And before free agency, you've got a labor market that bears the hallmarks of monopsony power (a monopsony is a market where the buyer of a good has control over the price of the good - in this case, the "good" is sports playing skills). Those are two good ingredients for cooking up a batch of unionism.

But why don't college football and basketball players unionize?