Question

Major league baseball is exempt from laws designed to limit market power and it operates as a monopoly.

Competition might be introduced into the market for baseball by​ _______.

A.

major league baseball playing regular season games in Europe

B.

declaring it no longer exempt from the laws designed to limit market power

C.

extending the season

D.

major league baseball introducing a second team in cities where only one major league team currently exists

E.

major league baseball introducing more teams in Canada

Answer 1

Answer: E

This league is exempt from antitrust laws; therefore, there is no restriction of doing unfair business practice of limiting teams into the league. This is a great advantage of teams participating in the league for increasing their market shares; actually it establishes monopoly power in the market.

Competition could only be increased if there are more teams in the market. It reduces market shares of old teams and gives market shares to new teams. Since there is no change in the number of audiences, market share could only be exchanged from old to new. This creates competition among those teams in order to stay in the market.