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Why were FIFA World Cup Tickets so cheap?

Author

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  • Eichhorn, Christoph
  • Sahm, Marco

Abstract

We examine the pricing decision of a multi-product monopolist in a two-sided market where the type structure of buyers on one side of the market is an important determinant of profit on the other side. In this situation it might be optimal to set prices below the maximum sellout price and to ration demand by a random mechanism in the first market to reach a type distribution more favorable for sales in the other market. The model establishes demand quality as an alternative link between markets in addition to standard quantitative effects and explains frequently observed underpricing, e.g. in the (sports) entertainment industry. It also provides an explanation for the effort a monopolist incurs to deter from resale.

Suggested Citation

  • Eichhorn, Christoph & Sahm, Marco, 2007. "Why were FIFA World Cup Tickets so cheap?," Discussion Papers in Economics 1357, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenec:1357
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    File URL: https://epub.ub.uni-muenchen.de/1357/1/paper.pdf
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    References listed on IDEAS

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    4. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
    5. Simon P. Anderson & Stephen Coate, 2005. "Market Provision of Broadcasting: A Welfare Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(4), pages 947-972.
    6. Ettore Damiano & Hao Li, 2007. "Price discrimination and efficient matching," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(2), pages 243-263, February.
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    More about this item

    Keywords

    Underpricing; Demand Rationing; Resale Deterrence;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

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