Bargaining in the transfer market: theory and evidence

Abstract

This paper examines the transfer market for association football players as operated in the English Football League using transfer data for the 1990–91 season. After describing the purposes and procedures involved in the transfer system together with the motives of the participants, we apply two-person bargaining theory to analyse the determination of transfer fees. The data and estimation procedures are explained and the results reported and interpreted. Our analysis suggests that the Nash bargaining theory captures the salient features of the bargaining process in the footballer's transfer market.