For example, Sidney Crosby would probably have chosen hockey over
other alternatives even at a much lower salary. However, because of
Crosby’s superior skills as a hockey player, most hockey teams would pay
handsomely to have him on their rosters, and he is able to command a
high salary from the team for which he does play. From the perspective of
the individual firm, the Pittsburgh Penguins, most of Crosby’s salary is
required to keep him from switching to another team and hence is not
economic rent. From the point of view of the hockey “industry,” however,
much of his salary is economic rent.
Notice also that Sidney Crosby’s salary is largely determined by the
demand for his services. Because he loves the sport and has skills that are
unique to hockey, his supply to the hockey industry is perfectly inelastic.
So the market-clearing price is determined by the position of the demand
curve.