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Inelastic sports pricing

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Author Info
Rodney Fort (Department of Economics, Washington State University, Pullman, WA 99164-4741, USA)
Abstract

A recurrent finding in estimates of the gate demand for sports events is pricing in the inelastic portion of demand. With few exceptions, this finding has either been ignored or (rather poorly) explained away. In this paper, the recurrent outcome is detailed and the explanations given by past authors are discussed. Then, profit maximization theory is explored for its inelastic pricing implications. It ends up that the local TV revenue relationships between MLB teams satisfy the situation that theory predicts would generate inelastic gate pricing. This suggests two things. First, inelastic pricing is consistent with profit maximizing team behavior. Second, fuller specification of revenue functions will enhance future work in the area. Copyright © 2004 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1108
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 25 (2004)
Issue (Month): 2 ()
Pages: 87-94
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Handle: RePEc:wly:mgtdec:v:25:y:2004:i:2:p:87-94

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Thomas H. Bruggink, 1993. "National Pastime to Dismal Science: Using Baseball to Illustrate Economic Principles," Eastern Economic Journal, Eastern Economic Association, vol. 19(3), pages 275-294, Summer. [Downloadable!]
  2. Bird, Peter J W N, 1982. "The Demand for League Football," Applied Economics, Taylor and Francis Journals, vol. 14(6), pages 637-49, December.
  3. Peter J. Sloane, 2000. "The Regulation of Professional Team Sports," IASE Conference Papers 0003, International Association of Sports Economists. [Downloadable!]
  4. Sloane, Peter J, 1971. "The Economics of Professional Football: The Football Club as a Utility Maximiser," Scottish Journal of Political Economy, Scottish Economic Society, vol. 18(2), pages 121-46, June.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dong C. Won & Young H. Lee, 2008. "Optimal dynamic pricing for sports games with habitual attendance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(8), pages 639-655. [Downloadable!]
  2. Ricard Gil & Wesley Hartmann, 2007. "The Role and Determinants of Concession Sales in Movie Theaters: Evidence from the Spanish Exhibition Industry," Review of Industrial Organization, Springer, vol. 30(4), pages 325-347, June. [Downloadable!] (restricted)
  3. Brad R. Humphreys & Victor Matheson, 2008. "PILOTs and Public Policy: Steering through the Economic Ramifications," Working Papers 0817, College of the Holy Cross, Department of Economics. [Downloadable!]
    Other versions:
  4. Trenton Smith & Young H. Lee, 2006. "Why are Americans Addicted to Baseball? An Empirical Analysis of Fandom in Korea and the U.S," Working Papers 2006-05, School of Economic Sciences, Washington State University. [Downloadable!]
  5. Katsushi Imai & Raghav Gaiha & Ganesh Thapa, 2008. "Food and oil prices," The School of Economics Discussion Paper Series 0801, Economics, The University of Manchester. [Downloadable!]
  6. Rodney Fort, 2004. "Subsidies as incentive mechanisms in sports," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(2), pages 95-102. [Downloadable!]
  7. Paul Madden, 2008. "Price, quality and welfare consequences of alternative club objectives in a professional sport league," The School of Economics Discussion Paper Series 0802, Economics, The University of Manchester. [Downloadable!]
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