Competition in Major League Baseball: the impact expansion

Abstract

Numerous empirical studies of competition within Major League Baseball (MLB) have highlighted the recent rise in competitive balance. While most explanations for the increased competitiveness have revolved around the establishment of the amateur draft or the introduction of free agency, the present paper maintains that the movement towards increased competition occurred much earlier. In particular, it is an outgrowth of the move to expand beyond the original 16 teams. The results from estimating the time-series behaviour of competitive balance within the two leagues suggests that the movement toward greater competitive balance occurred quickly after the two leagues began expanding. Finally, rather than use the conventional standard deviation measure for competitive balance, the present paper incorporates a more traditional measure of inequity, the Gini coefficient.