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Optimal dynamic pricing for sports games with habitual attendance

Author

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  • Dong C. Won

    (Ajou University, Suwon, South Korea)

  • Young H. Lee

    (Sogang University, Seoul, South Korea)

Abstract

This paper provides a theoretical analysis of the optimal pricing decisions of a sports team that maximizes lifetime profits in sports markets where game attendance is habit-forming for sports fans. The long-run equilibrium price and attendance level are found to be greater than the counterparts of the static framework, respectively. The infinite horizon model shows that the pricing strategy of the firm brings about an upward-crossing of two different dynamic price paths where the price path with stronger habit formation initially stays below, catches up, and ultimately rises above the price path with weaker habit formation. It is worth noting that the upward-crossing phenomenon is not fully understood in a finite-period model. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • Dong C. Won & Young H. Lee, 2008. "Optimal dynamic pricing for sports games with habitual attendance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(8), pages 639-655.
    • Handle: RePEc:wly:mgtdec:v:29:y:2008:i:8:p:639-655
    DOI: 10.1002/mde.1427
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    References listed on IDEAS

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    Cited by:

    1. Bednall, David Hugh & Valos, Michael & Adam, Stewart & McLeod, Colin, 2012. "Getting Generation Y to attend: Friends, interactivity and half-time entertainment," Sport Management Review, Elsevier, vol. 15(1), pages 80-90.
    2. Qi Ge & Brad R. Humphreys & Kun Zhou, 2020. "Are Fair Weather Fans Affected by Weather? Rainfall, Habit Formation, and Live Game Attendance," Journal of Sports Economics, , vol. 21(3), pages 304-322, April.

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