Life-Cycle Demand for Major League Baseball

Seung Ahn () and Young Hoon Lee

International Journal of Sport Finance, 2007, vol. 2, issue 2, 79-93

Abstract: Static microeconomic theory predicts that monopolists set prices in the elastic range of the demand curves for their products. However, for nearly thirty years, most of the empirical studies of sports-game attendance demand have failed to support this prediction. This paper shows that in a multiple time-period model, professional team owners are likely to set ticket prices at which attendance demand is price-inelastic if the intertemporal elasticity of substitution for games is small and/or if attending games is habit-forming. Our empirical study shows that these two conditions hold for Major League Baseball (MLB) attendance. This result is consistent with the notion that inelastic pricing would be the outcome of MLB owners’ rational decisions.

Keywords: Major League Baseball; inelastic pricing; habit-forming attendance demandg (search for similar items in EconPapers)
JEL-codes: L83 (search for similar items in EconPapers)
Date: 2007
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International Journal of Sport Finance is currently edited by Arne Feddersen, Babatunde Buraimo, Joachim Prinz and Jane Ruseski

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