Per-unit versus ad-valorem discrimination with an application to MLB

ABSTRACT

We contrast two structural forms of discrimination: per-unit and ad-valorem. We provide a simple modification to Becker’s canonical discrimination model allowing for heterogeneous worker quality and both per-unit and ad-valorem discrimination. Per-unit discrimination costs reduce the relative cost of minorities with higher marginal products. This simple insight, which builds upon the Alchian–Allen hypothesis, yields sharp testable implications. We argue that several features of the MLB labour market are consistent with per-unit discrimination.

KEYWORDS:

• Discrimination
• per-unit
• ad-valorem
• MLB
• baseball
• quantile regression

JEL CLASSIFICATION:

• Z22
• J71
• J82

Disclosure statement

No potential conflict of interest was reported by the authors.