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Equilibrium Price Dynamics in Perishable Goods Markets: The Case of Secondary Markets for Major League Baseball Tickets

  • Andrew Sweeting

This paper analyzes the dynamics of prices in two online secondary markets for Major League Baseball tickets. Controlling for ticket quality, prices tend to decline significantly as a game approaches. The paper describes and tests alternative theoretical explanations for why this happens in equilibrium, considering the problems of both buyers and sellers. It shows that sellers cut prices (either fixed prices or reserve prices in auctions) because of declining opportunity costs of holding onto tickets as their future selling opportunities disappear. Even though prices can be expected to fall, the majority of observed early purchases can be rationalized by plausible ticket valuations and return to market costs given product differentiation and uncertainties about ticket availability.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14505.

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Date of creation: Nov 2008
Date of revision:
Handle: RePEc:nbr:nberwo:14505
Note: IO
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  17. Pascal COURTY, 2000. "An economic guide to ticket pricing in the entertainment industry," Discussion Papers (REL - Recherches Economiques de Louvain) 2000024, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  18. Pascal Courty, 2003. "Some Economics of Ticket Resale," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 85-97, Spring.
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  29. Hendricks, Ken & Porter, Robert H., 2007. "An Empirical Perspective on Auctions," Handbook of Industrial Organization, Elsevier.
  30. Alan Sorensen & Phillip Leslie, 2007. "Ticket Resale," 2007 Meeting Papers 527, Society for Economic Dynamics.
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