Monopolistic Bargaining and Inflated Salaries in the Sports Job Market

In sports, the contract design of professional players is beset with issues because of market efficiency. Professional sports players hire skillful brokers to have better contracts. This study’s main objective is to show how a broker can inflate a contract offer and affect social welfare. Behind an inflated offer are two types of incentives. Such incentives result from a tripodal game among owner, player, and broker. Due to these two incentives, a player's salary is inflated, and the inflated salary hurts the efficiency of a job market.