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Life-Cycle Demand for Major League Baseball

Author

Listed:
  • Seung C. Ahn

    () (Arizona State University)

  • Young H. Lee

    (Hansung University)

Abstract

Static microeconomic theory predicts that monopolists set prices in the elastic range of the demand curves for their products. However, for nearly thirty years, most of the empirical studies of sports-game attendance demand have failed to support this prediction. This paper shows that in a multiple time-period model, professional team owners are likely to set ticket prices at which attendance demand is price-inelastic if the intertemporal elasticity of substitution for games is small and/or if attending games is habit-forming. Our empirical study shows that these two conditions hold for Major League Baseball (MLB) attendance. This result is consistent with the notion that inelastic pricing would be the outcome of MLB owners’ rational decisions.

Suggested Citation

  • Seung C. Ahn & Young H. Lee, 2007. "Life-Cycle Demand for Major League Baseball," International Journal of Sport Finance, Fitness Information Technology, vol. 2(2), pages 79-93, May.
  • Handle: RePEc:jsf:intjsf:v:2:y:2007:i:2:p:79-93
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    Citations

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    Cited by:

    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.
    2. Young Hoon Lee, 2013. "Estimation of temporal variations in fan loyalty: application of multi-factor models," Chapters,in: The Econometrics of Sport, chapter 8, pages 135-153 Edward Elgar Publishing.
    3. Budzinski, Oliver & Feddersen, Arne, 2015. "Grundlagen der Sportnachfrage: Theorie und Empirie der Einflussfaktoren auf die Zuschauernachfrage," Ilmenau Economics Discussion Papers 94, Ilmenau University of Technology, Institute of Economics.
    4. Young H. Lee & Trenton G. Smith, 2008. "Why Are Americans Addicted To Baseball? An Empirical Analysis Of Fandom In Korea And The United States," Contemporary Economic Policy, Western Economic Association International, vol. 26(1), pages 32-48, January.

    More about this item

    Keywords

    Major League Baseball; inelastic pricing; habit-forming attendance demandg;

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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