1.What are some methods by which team owners are able to restrict player salaries? Using our two-team marginal revenue model show how a policy restricting salary (without affecting marginal revenue) affects the portion of revenue going to players.

2.Suppose an MLB player enters arbitration and the arbitrator knows the value of the player to be $5 million per year, what is the Nash equilibrium for salary submission by both the team and the player? Why doesn't the team just give a salary of $100,000 for every player in arbitration?

3.Suppose a work stoppage is being considered. Let A=value of the next best alternative, M=money cost during stoppage, G be the gain if the stoppage works, F be costs of fanire from stoppage, and P=probability of a successful stoppage.

• What is the expected value of the stoppage?
• Use the expected value from the previous part to explain how the USFL could have affected the bargaining power of NFL players.