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Wednesday, April 26 • 10:35am - 10:55am
MLB Sluggers: How Marginal Revenue Product Relates To The Business Of Baseball

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This research project examines the economic theory of Marginal Revenue Product and how it relates to the business of baseball. This theory will be tested with an econometric analysis using Ordinary Least Squares and three related regression equations. The first equation determines the relationship between runs and On Base Percentage, Slugging Percentage, and Net Stolen Bases. The next equation determines the relationship between wins and runs, and runs allowed. The third equation determines the relationship between team revenue and wins all else equal including population, stadium novelty, and the average income per capita. From these equation estimates, an individual player’s productivity statistics, and the productivity statistics of the next best available player, I can determine if the player is paid their Marginal Revenue Product. I conclude by randomly selecting 10 players, comparing their predicted Marginal Revenue Product to their actual salary, and discussing why or why not these selected players are paid above, below, or equal to their marginal revenue product.

Wednesday April 26, 2017 10:35am - 10:55am
035 Karpen Hall