On the excellent Truth on the Market, Professor Josh Wright (George Mason University School of Law) replies to my comments on CNN Money concerning the Harlem Ambassadors' complaint with the FTC against the Harlem Globetrotters and their exclusivity contracts. I argue that elimination or contraction of the exclusivity contracts would enhance competition in the market of barnstorming basketball, and that would be a good thing for fans. Wright contends:
[T]here is an economic fallacy underlying this logic that I cannot resist pointing out. The claim is that competition is not present where we observe these exclusivity clauses, or at least that there should be more competition, and that therefore antitrust law might improve consumer welfare eliminating the clauses. This is wrong. There is competition for the contract.While I understand Wright's theoretical point, I find it hard to imagine how there can be actual competition for the exclusivity contracts when only one actor--an apparent monopoly--has the market power to obtain them.
A great post worth checking out.
Update: Professor Wright replies to my post above. This is one of those days when I am especially grateful to be a law professor: I can have a debate about the Harlem Globetrotters, and it still counts as work.
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