Monday, January 09, 2006

Price Discrimination Lesson In Sports

I'm not a sports fan, but I overhead some of my colleagues discussing last Saturday's game between the Washington Redskins and the Tampa Bay Buccaneers. I'm told this was a very important game, thus many Redskins fans traveled all the way to Florida to see it.

Naturally, Buc fans didn't want the other guys sitting in their stadium, cheering the enemy so the ticket agents claimed to anyone with a Virginia, DC or Maryland license that they were sold out. This is where it gets funny. Less enthusiatic natives who could buy tickets did so and re-sold them to Redskins fans at a tidy profit.

While not typical price discrimination, the attempt still counts because the price to buy was deliberately increased for a certain group. But no economist should be surprised it didn't work because these tickets can be easily resold; the stadium merely created an arbitrage opportunity. A friend who was at the game tells me about half the stadium were Redskins fans (I think she's exaggerating but even half that would be impressive). Price discrimination only works with items that are hard to resell, such as education, plane tickets or the physical entering of a stadium, but not a resellable ticket that allows the ticketholder in. Economics be a harsh mistress to those that don't respect or understand her.

For the record the Redskins won 17-10.

1 comment:

AJE said...

To be fair it didn't look like half the stadium, but there was a sizeable contingent - some combination of the Coase Theorem and the Alchian-Allen effect, I think, similar to here: