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The Impact of Price Discrimination on Revenue: Evidence from the Concert Industry

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  • Pascal Courty
  • Mario Pagliero

Abstract

Concert tickets can either be sold at a single price or at multiple prices corresponding to different seating categories. We study the relationship between price discrimination and revenue by examining variations in the number of seating categories across concert, tour, artist, location, and time. Offering multiple seating categories leads to revenues that are approximately 5 percent higher than with single price ticketing. The return to price discrimination is higher in markets with more heterogeneous demand, for musical groups that appeal to a more fragmented audience, in smaller venues and in more competitive markets. The return of increasing from three to four categories of seating is about half that of increasing from one to two.

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Bibliographic Info

Paper provided by European University Institute in its series Economics Working Papers with number ECO2009/04.

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Date of creation: 2009
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Handle: RePEc:eui:euiwps:eco2009/04

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Keywords: Price discrimination; return to price discrimination; second degree price discrimination;

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References

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  1. Pascal Courty, 2003. "Some Economics of Ticket Resale," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 85-97, Spring.
  2. Holbrook, Morris B & Schindler, Robert M, 1989. " Some Exploratory Findings on the Development of Musical Tastes," Journal of Consumer Research, University of Chicago Press, vol. 16(1), pages 119-24, June.
  3. Marie Connolly & Alan Krueger, 2005. "Rockonomics: The Economics of Popular Music," Working Papers 878, Princeton University, Department of Economics, Industrial Relations Section..
  4. Alan Sorensen & Phillip Leslie, 2007. "Ticket Resale," 2007 Meeting Papers 527, Society for Economic Dynamics.
  5. Aviv Nevo & Catherine Wolfram, 2002. "Why Do Manufacturers Issue Coupons? An Empirical Analysis of Breakfast Cereals," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 319-339, Summer.
  6. Verboven, Frank, 1999. "Product Line Rivalry and Market Segmentation--With an Application to Automobile Optional Engine Pricing," Journal of Industrial Economics, Wiley Blackwell, vol. 47(4), pages 399-425, December.
  7. Meghan Busse & Marc Rysman, 2005. "Competition and Price Discrimination in Yellow Pages Advertising," RAND Journal of Economics, The RAND Corporation, vol. 36(2), pages 378-390, Summer.
  8. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, Elsevier.
  9. Eugenio J. Miravete & Lars-Hendrik Röller, 2003. "Estimating Markups under Nonlinear Pricing Competition," CIG Working Papers SP II 2003-21, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  10. Ed Glaeser & Jed Kolko & Albert Saiz, 2000. "Consumer City," NBER Working Papers 7790, National Bureau of Economic Research, Inc.
  11. Sofronis K. Clerides, 2004. "Price Discrimination with Differentiated Products: Definition and Identification," Economic Inquiry, Western Economic Association International, vol. 42(3), pages 402-412, July.
  12. Armstrong, Mark, 2006. "Price discrimination," MPRA Paper 4693, University Library of Munich, Germany.
  13. Pascal Courty & Mario Pagliero, 2009. "Price Discrimination in the Concert Industry," Economics Working Papers ECO2009/05, European University Institute.
  14. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
  15. Phillip Leslie, 2004. "Price Discrimination in Broadway Theater," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 520-541, Autumn.
  16. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
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Cited by:
  1. Siegert, Caspar & Ulbricht, Robert, 2014. "Dynamic Oligopoly Pricing: Evidence from the Airline Industry," TSE Working Papers 14-478, Toulouse School of Economics (TSE).
  2. Drayer, Joris & Rascher, Daniel A. & McEvoy, Chad D., 2012. "An examination of underlying consumer demand and sport pricing using secondary market data," Sport Management Review, Elsevier, vol. 15(4), pages 448-460.

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