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The posting system is an arrangement between MLB and the Nippon Professional Baseball League that allows a player on a Japanese club to be transferred to a MLB club if the player is not yet eligible for free agency. Between November 1 and February 1, 332 a Japanese player can be posted by his Japanese club at his request. The MLB Commissioner notifies each MLB club and collects sealed bids for the negotiating rights to the player. The highest bid wins the auction, although the maximum bid was restricted to $20 million in the modified 2013 posting agreement. The Japanese player has until the end of January to negotiate a new contract with the winning bidder if no contract is reached, the players rights revert back to the Japanese club which then does not receive any of the winning bid. The highest bid came in 2012 when the Texas Rangers paid $51.7 million for the posting rights for pitcher Yu Darvish. Darvish settled for a six-year contract paying $60 million. The posting system was changed in the 2017 collective bargaining agreement. Use the monopsony model to consider whether Darvish got a good deal.

What is the maximum amount that the Rangers would have bid to acquire the posting rights to Darvish? Finally, can you think of a situation where all three parties in the agreement came out with more profit?

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