Wednesday, December 9, 2009
Price Discrimination w/ Cleveland Indians Season Tickets
I recently encountered an example of price discrimination a few weeks ago when my friend told me that his parent’s Cleveland Indians season tickets were decreased in price for next season by 40 percent. This discount, however, only happened because of their complaints about my parents being offered season tickets for half off right before the beginning of the season last year. Essentially, while it angers the people that pay the higher price, the Indians use price discrimination techniques to sell more season ticket packages and capture more consumer surplus than they otherwise would. My parents were season ticket holders during the late 90s and early 2000s (when the Indians were good), but got rid of them once the team went into “rebuilding” mode around 5 or so years ago. Last season, about a week or so before the season began, the Indians realized they still had many unsold season ticket packages, and since the marginal cost of an extra person coming to a baseball game is essentially zero, while the marginal revenue is very high, they tried to lower the prices of season tickets to people who were willing to pay something for season tickets but not as much as current season ticket holders. So, the Indians contacted my parents figuring they would be interested in discounted season tickets since they had them before but were no longer willing to pay for them at regular price. The Indians unsurprisingly keep deals like this quiet, as I could not find any information on offers like this on the Internet. The reason they do this is because if everyone knew they could get half price season tickets by pretending that they were not willing to pay the full price, as my friend’s parents did, then the price discrimination would no longer work because price discrimination requires that the willingness to pay of various groups of consumers can be identified.
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yeah most teams that cannot sell all of their season tickets especially the highest priced ones do this all the time. I read an article about the Dallas Cowboys new super stadium and they did this with their 50 yard line lower season tickets. Fans spent thousands of dollars only to find out a week before the season that they were selling for half price.
ReplyDeleteIm really not sure if this is even related, but don't the Browns do the same thing? I thought there was some new rule that if they didn't sell out all the home games, their games were not broadcast.
ReplyDeleteChristina: You can read my comments to this post: http://econ670.blogspot.com/2009/12/national-football-league-government.html regarding broadcasting of games that are not sold out. You will find out this is nothing close to a new rule. Some teams like the Browns have such a loyal fanbase that this will never be any problem for them.
ReplyDeleteGo here Indians Tickets to see a list of games I am selling.
ReplyDelete