Saturday, June 1, 2013

NFL teams accused of colluding against veteran free agents

Link here

An excerpt: 
"I basically think the owners got together and decided not to spend the cash on free agents," Freeney told "I definitely think that's part of it. I think the owners made a pact. There's only 32 of them and none of them broke ranks. I think they all decided not to spend money."

So Dwight Freeney claimed that owners made a pact to collude to lower the salaries of veterans.  This is a standard type of problem that we cover in principles of microeconomics courses.  

There are incentives for firms to collude and form a cartel (even though it is usually illegal).  The big problem for a cartel is that it only takes one firm to "cheat" on the agreement.  And there usually is an incentive for firms to cheat on the cartel.

In this case, there are 32 NFL teams.  It seems crazy to think that all 32 teams could be in on this collusion and a) no word about it leaks to the press and b) one of the firms doesn't decide to cheat on the agreement and sign a player anyway. 

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