IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/25830.html
   My bibliography  Save this paper

Treatment of Travel Expenses by Golf Course Patrons: Sunk or Bundled Costs and the First and Third Laws of Demand

Author

Listed:
  • Matt, Brown
  • Daniel, Rascher
  • Chad, McEvoy
  • Mark, Nagel

Abstract

To attract golf patrons, sport managers must understand consumption patterns of the golfer. Importantly, the treatment of travel costs must be understood. According to the Alchian-Allen (1964) theorem, golfers treat travel costs as bundled costs (third law of economic demand) whereas classical consumer theory indicates that golfers treat travel costs as sunk costs (first law of economic demand). The purpose of this study was to determine if golf patrons treated travel costs as sunk costs or if they treated travel costs as a bundled cost. Data from a survey of course patrons in Ohio support the treatment of travel costs as bundled costs by golf course patrons, especially those classified as tourists. Managers should utilize geographic segmentation in choosing whom to market their course based upon their product’s price compared to area competitors, as shown by the strong, positive correlation found between distance traveled and cost of green fees.

Suggested Citation

  • Matt, Brown & Daniel, Rascher & Chad, McEvoy & Mark, Nagel, 2007. "Treatment of Travel Expenses by Golf Course Patrons: Sunk or Bundled Costs and the First and Third Laws of Demand," MPRA Paper 25830, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:25830
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/25830/1/MPRA_paper_25830.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Cowen, Tyler & Tabarrok, Alexander, 1995. "Good Grapes and Bad Lobsters: Applying the Alchian and Allen Theorem," Economic Inquiry, Western Economic Association International, vol. 33(2), pages 253-256, April.
    2. Bertonazzi, Eric P & Maloney, Michael T & McCormick, Robert E, 1993. "Some Evidence on the Alchian and Allen Theorem: The Third Law of Demand?," Economic Inquiry, Western Economic Association International, vol. 31(3), pages 383-393, July.
    3. Borcherding, Thomas E & Silberberg, Eugene, 1978. "Shipping the Good Apples Out: The Alchian and Allen Theorem Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 86(1), pages 131-138, February.
    4. Yoram Bauman, 2004. "Shipping the Good Apples Out: A New Perspective," Economic Inquiry, Western Economic Association International, vol. 42(3), pages 534-536, July.
    5. Laura Razzolini & William F. Shughart & Robert D. Tollison, 2003. "On the Third Law of Demand," Economic Inquiry, Western Economic Association International, vol. 41(2), pages 292-298, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liu, Liqun, 2011. "The Alchian-Allen theorem and the law of relative demand: The case of multiple quality-differentiable brands," Mathematical Social Sciences, Elsevier, vol. 61(1), pages 52-57, January.
    2. Charlotte Emlinger & Viola Lamani, 2020. "International trade, quality sorting and trade costs: the case of Cognac," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(3), pages 579-609, August.
    3. Minagawa, Junichi, 2012. "On Giffen-like goods," Economics Letters, Elsevier, vol. 115(2), pages 282-285.
    4. Saito, Tetsuya, 2007. "Shipping the Good Apples Out: Another Proof with A Graphical Representation," MPRA Paper 1297, University Library of Munich, Germany.
    5. Minagawa, Junichi & Upmann, Thorsten, 2013. "A conditional demand approach to the Alchian–Allen effect," Economics Letters, Elsevier, vol. 120(3), pages 546-551.
    6. repec:ebl:ecbull:v:6:y:2008:i:30:p:1-12 is not listed on IDEAS
    7. Minagawa, Junichi & Upmann, Thorsten, 2013. "A note on parental time allocation," Labour Economics, Elsevier, vol. 25(C), pages 153-157.
    8. William L. Anderson & Scott Kjar, 2008. "Can Good Apples Be Mixed with Bad Economics? A Mengerian Critique of the Alchian and Allen Theorem," American Journal of Economics and Sociology, Wiley Blackwell, vol. 67(4), pages 645-660, October.
    9. Junichi Minagawa & Thorsten Upmann, 2012. "The Generalized Alchian-Allen Theorem," CESifo Working Paper Series 3969, CESifo.
    10. Tetsuya Saito, 2008. "An Expository Note on Alchian-Allen Theorem When Sub-Utility Functions are Homogeneous of Degree n > 0 with Two-Stage Budgeting," Economics Bulletin, AccessEcon, vol. 6(30), pages 1-12.
    11. repec:wvu:wpaper:05-11 is not listed on IDEAS
    12. James, Jennifer S. & Alston, Julian M., 2002. "Taxes and quality: A market-level analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(3), pages 1-29.
    13. Goodhue, Rachael E. & LaFrance, Jeffrey T. & Simon, Leo K., 2009. "Wine Taxes, Production, Aging and Quality," Journal of Wine Economics, Cambridge University Press, vol. 4(1), pages 27-45, April.
    14. Blum, Bianca, 2018. "Ausgestaltung einer Steuerpolitik zur Förderung von LED-Beleuchtung," The Constitutional Economics Network Working Papers 01-2018, University of Freiburg, Department of Economic Policy and Constitutional Economic Theory.
    15. R. Morris Coats & Gary M. Pecquet & Leon Taylor, 2005. "The pricing of gasoline grades and the third law of demand," Microeconomics 0506006, University Library of Munich, Germany.
    16. Jean Eid & Travis Ng & Terence Tai-Leung Chong, 2013. "Shipping the Good Horses Out," Southern Economic Journal, John Wiley & Sons, vol. 80(2), pages 540-561, October.
    17. T Nesbit, 2007. "Excise Taxation and Product Quality: The Gasoline Market," Economic Issues Journal Articles, Economic Issues, vol. 12(2), pages 1-14, September.
    18. James, Jennifer S., 1999. "Endogenous Quality And Agricultural Policy Analysis," 1999 Annual meeting, August 8-11, Nashville, TN 21634, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    19. Liu, Liqun & Rettenmaier, Andrew J. & Saving, Thomas R., 2011. "How much and how often: A model of repeated consumption with endogenous consumption frequency," Economics Letters, Elsevier, vol. 110(3), pages 186-188, March.
    20. Pramesti Resiandini, 2014. "Japanese and Korean automobile exports and the Alchian-Allen theorem," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 7(1), pages 86-98.
    21. Robert Lawson & Todd Nesbit, 2013. "Alchian and Allen Revisited: Law Enforcement and the Price of Weed," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 41(4), pages 363-370, December.
    22. Daniel Bunting & Kevin J. Fox, 2014. "The Impact of Quarantine Policies on the Quality of Imports," Discussion Papers 2014-01, School of Economics, The University of New South Wales.

    More about this item

    Keywords

    Alchian-Allen Theorem; Third Law of Demand; Golf Tourism; Bundling;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:25830. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.