The Pay Off of the Trade

The economic principle that I researched was how people gain when they trade voluntarily. 

MLBTradeRumors.com

To introduce this idea, consider how many great baseball players that every general manager would love to have on their team, such as Albert Pujols. However, only a portion of the players available to sign with a team of their choosing are truly worth their price and have a good fit with the specific team. The article, published in the Los Angeles Times and titled “INSIDE BASEBALL; ON BASEBALL; These contracts may be killers”, demonstrates the economic principle of scarcity because it shows how MLB teams cannot afford to spend money on every quality player in the free agent market and how the teams cannot take too many players that only fit at one or two positions on the field.

The team wanting to bring in new players to their organization needs to thoroughly evaluate the player’s value before spending a major chunk of money. For example, the Florida Marlins (now called the Miami Marlins) were “linked to rumors involving [Albert] Pujols and [Prince] Fielder… though the Marlins are more likely to settle for [Hanley] Ramirez or [Jose] Reyes.” In this case, the Marlins realized that they were probably going to pay Pujols or Fielder more money than what they were worth mathematically if they elected to sign one of those high-profile players, so they believed that they could receive a better value by signing a player not quite as expensive but still quality. In other words, the Marlins had to settle for less because their financial situation did not permit them to spend high, so this illustrates the idea of how people gain when they trade voluntarily.

(LAST BLOG POST... no future research question)