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Can We Find It at the Concessions? Understanding Price Elasticity in Professional Sports

Author

Listed:
  • Anthony C. Krautmann

    (DePaul University)

  • David J. Berri

    (California State University, Bakersfield)

Abstract

The sports economics literature regularly finds that sports teams price admissions in the inelastic range of demand. Given that marginal revenue is negative in this range, yet marginal cost is always nonnegative, this result suggests an inconsistency in the profit motive of owners. In this article, we attempt to explain inelastic ticket pricing by considering the complementarity between tickets sold and concessions. Depending on marginal revenue and cost parameters, we show that it is entirely possible to find profit-maximizing owners pricing tickets in the inelastic region of demand to sell more concessions.

Suggested Citation

  • Anthony C. Krautmann & David J. Berri, 2007. "Can We Find It at the Concessions? Understanding Price Elasticity in Professional Sports," Journal of Sports Economics, , vol. 8(2), pages 183-191, May.
    • Handle: RePEc:sae:jospec:v:8:y:2007:i:2:p:183-191
    DOI: 10.1177/1527002505275093
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    References listed on IDEAS

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    1. Ferguson, D G, , et al, 1991. "The Pricing of Sports Events: Do Teams Maximize Profit?," Journal of Industrial Economics, Wiley Blackwell, vol. 39(3), pages 297-310, March.
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    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 121-146, June.
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