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62 Antitrust Bull. 3 (2017)

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Article

                                                                                  The Antitrust Bulletin
                                                                                  2017, Vol. 62(l) 3-14
The NCAA                Cartel, Monopsonistic                                    K© The Author(s) 2017
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                                                                          DOI: 10.1 177/0003603XI6688836
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                                                                                        OSAGE

Roger D. Blair* and Joseph Whitman*



Abstract
NCAA   members   behave like a buyer cartel and use the bylaws of the NCAA to maintain their collusive
agreement.  We  model  the NCAA   as a collusive monopsony  and demonstrate  the impact  on com-
pensation and employment   for student athletes, as well as the consequences for social welfare and
distribution of surplus. Then we identify specific NCAA bylaws that restrain competition among cartel
members,  such as limits on the number of athletic scholarships awarded, recruiting, player transfers,
and athletic housing. Lastly, we discuss the effects of the NCAA's recent move to lift the restriction on
contract durations for student athletes and the  recent Agnew  antitrust litigation which may have
precipitated this change.

Keywords
Monopsony,   NCAA,   Antitrust, Buyer Cartels


1. Introduction
The National Collegiate Athletic Association (NCAA), which was  founded in 1906, describes itself as
a membership   driven organization dedicated to safeguarding the well-being of student athletes.'
While the origins of the NCAA can be traced to serious concerns for player safety, the NCAA can now
be reasonably described as a profit-maximizing cartel that thrives on exploiting student athletes in the
pursuit of profit.2 While the athletic competition on the field or in the arena may be fierce, there is a
good deal of cooperation off the field. Nobel Laureate Gary Becker once characterized the NCAA as a
cartel in sheepskin clothing.3 No doubt, the NCAA  and most-if   not all-of its members  would
object to this characterization, but we will argue that the cartel label is entirely appropriate.4 In this
article, we will examine the NCAA's  policies regarding student athletes.


1. This statement is featured prominently on the NCAA website: http://www.ncaa.org/about/who-we-are
2. ARTHUR A. FLEISHER III, BRIAN L. GOFF, & ROBERT D. TOLLISON, THE NATIONAL COLLEGIATE ATHLETIC ASSOCIATION (1992).
3. Gary S. Becker, The NCAA: A Cartel in Sheepskin Clothing, BUSINESS WEEK (Sep. 14, 1987).
4. Since the NCAA describes itself as a membership driven organization, the members can hardly claim that they are not
   independent economic entities working together. That is, they cannot claim to be a single entity. This makes them vulnerable
   to antitrust challenge under American Needle, Inc. v. National Football League, 560 US 183 (2010).

*Department of Economics, University of Florida, Gainesville, FL, USA

Corresponding Author:
Roger D. Blair, Department of Economics, University of Florida, Gainesville, FL 32611, USA.
Email: rdblair@ufl.edu

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