Marginal Revenue Product Project & Simulator
Wooten & White (2018) describes a class project that explores the principles of marginal revenue product, labor markets, and estimates of firm profits using actual data from Major League Baseball. That particular project focused on collecting data to calculate marginal revenue product in an effort to increase student engagement by using a familiar subject matter. The project culminates with an in-class draft and season simulation activity that allows students to apply the information they have collected in order to make decisions based on their work.
The simulator mentioned in the original Journal of Economics Teaching article is now available as a web app, but any instructor interested in a downloadable file should reach out to the authors. A downloadable version of the simulator is available, but the web app is more stable. We have also provided additional resources that other instructors (and our students) have requested over the years.
The Project Instructions file listed below contains links to constantly updated data sources from Sportrac, Baseball Reference, ESPN, and Statista. These websites routinely update as new players declare for free agency or as players retire, but there are some limitations to each of the data sources. For example, some players may be retired for multiple years, but technically be eligible for free agency. In order to successfully complete the project, the available player list should be based on players who played an entire season and then signed to a contract for the following year. This will allow students to estimate the player's value based on observable statistics (the prior year) and their expected contribution as represented by their salary (the current year). If you're an instructor looking to use only the simulator and would like a spreadsheet of the most recent free agents, please contact us directly.