Abstract
The restrictive covenants contained in the professional baseball player’s standard contract can be justified on grounds of being the most efficient solution to the problem of transaction costs in an industry where the difficulty of selecting and managing talent is acute. Contract law legitimates these restrictive covenants. Closer scrutiny of the history and sociopolitical context of the employment relationship in baseball underlines the role of power differentials in determining the parameters within which transacting for labor takes place. Not only the reserve clause but also the negative covenant in the player’s contract has been important in providing the conditions for the efficient trading of players.
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