Team Production and Factor Substitution in Major League Baseball

In this paper, we estimate a translog production function for Major League Baseball (MLB) teams that uses factor inputs for hitting, pitching and defence over the 1960–2024 MLB seasons. The computed elasticities of substitution suggest that hitting and pitching are used in fixed proportions, while both hitting and pitching are highly substitutable for defence. Teams that used a designated hitter (DH) substituted hitting and defence to a much greater degree than those without a DH. The widespread adoption of analytics after the 1995 season increased the substitution of pitching and defence markedly but not hitting and defence. These results call into question the widespread use of the Cobb–Douglas production function in estimating the marginal revenue products of players.