The following is an exerpt of an off-list discussion that followed up that list thread:
... as you can tell, I have made some major simplifications. Perhaps the most glaring one is that I have treated labor demand like consumption demand -- consumer demand for goods (and student demand for university education) is determined by maximizing utility, whereas demand for factors of production is determined by maximizing profit. I think that the arguments can be stated in a more parallel formulation than is usual, with marginal profit playing the role in factor prices that marginal utility plays in goods prices.
As I understand it, MJ's economic rent refers to his labor supply curve: income in excess of his ``wages'' (in the economists' technical sense) is MJ's quasi rent. These wages are the price level on a supply curve that is the complement of MJ's leisure demand function. I happen to believe that MJ really can take it or leave it (as he already did once) -- that he has, as he has said, nothing left to prove. Therefore, I think that his compensation is mostly in the category of wages. (For a star actor desperate to appear on the screen, it would be a different story.) However, the main point that I wanted to get across was about demand and not supply, since strange complaints had been voiced about inconsistency between pay offered for professor labor on the one hand (labor demand), and the (absolute) value of that labor (to society). The truth about labor supply is that some professors get quasi rent too: they would still be willing to work the same amount for less pay.
> ... I > thought that rent was the category used to explain paying celebrities > more than the cost of the same services provided by just anyone from > a labor market. ...I may be wrong, but as I understand it quasi rent explains why (or gives a name to how) celebrities earn more than would be strictly necessary to employ them. I don't think it directly explains why they are worth more to hirers in the labor market. It is also true that a different kind of economic rent _does_ have to do with the profits of the basketball franchise, but this works the other way: if the franchise is not paying MJ all he's worth to them, then _that_ is a quasi rent to them. I don't think that (in management's judgement) they are getting much quasi rent out of employing him (his wages are so high), and perhaps that is reflected in their willingness to see him leave with his coach. On the other hand, I'm not sure that team owners are very ``rational'' economic actors in any sense.