Another answer looks at real ticket prices. If the team doesn't raise its ticket prices but the overall price level does change, then the real price of tickets has fallen.
A similar question - why don't teams auction (on Ebay, for example) a block of seats that they know will not sell under normal circumstances? Isn't it better to produce some revenue for those seats rather than no revenue, even if seats that are normally $20 go for $6 in an auction?
Both of the previous comments are on target. No price change is a real price decline. And it does end up that we really don't get to see the price at which many tickets actually are sold. I've seen the "dailies" for a team for a season. You wouldn't believe the wheeling and dealing that goes on; in a given reserved section, the price variation on special block sales truly astonished me. Unfortunately, the data were only for a year so it's not much to go on. Just an observation that so-called $20 seats often do go for $6!
The Indians are now advertising a 6 tickets to six games for $36 policy. At the rate they are going, they will have to cut that even more.
I like that explanation for ticket price rigidity... the one that assumes that the demand curve is perfectly elastic. Not sure I agree with it, but I'd give full credit if this were a quiz.
Hmmm. Perfectly elastic demand is 1) typically something we think about at the individual firm level and 2) not supported by any of the empirical work on sports demand functions. Indeed, just the opposite is true; demand is typically unit elastic at best, and nearly always inelastic. Even given that many of the works use weakly specified demand functions, it's still a long way from unit elastic to perfectly elastic!
I agree with Rod that it is unlikely demand for tickets is perfectly elastic (horizontal). In my original posting, I assumed that the demand curve is linear, meaning that the elasticity varies with the price and quantity.
Rod also hints at another intriguing result that continues to pop out of the empirical literature: estimates of price elastcity of demand being less than one, implying that MR is negative. Perhaps we can get him to join us and post something about this.
I already can post (thanks Skip). If this is interesting enough, I'd be glad to. I'll put something together for Monday.
Hmm. Since nobody responds in the affirmative, I'll not presume it to be interesting enough to the bloggers here.
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