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Inelastic sports pricing

  • Rodney Fort

    (Department of Economics, Washington State University, Pullman, WA 99164-4741, USA)

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    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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    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
    Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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    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.
    2. KÉSENNE, Stefan, . "Revenue sharing and competitive balance in professional team sports," Working Papers 1999019, University of Antwerp, Faculty of Applied Economics.
    3. 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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