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Abstract

The relationship between bargaining power and the structure of salaries in major league baseball has been a subject of much empirical study. The evidence provided in this paper suggests that eligibility for final-offer arbitration does not result in a ‘fixed’ reduction in monopsonistic exploitation. Rather, the level of exploitation diminishes markedly in the first season of eligibility and continues to decrease in subsequent seasons. By the time the player reaches free agency eligibility, he can expect to earn the same single-season salary that he would as a free agent.