Why were FIFA World Cup Tickets so cheap?

Christoph Eichhorn and Marco Sahm

Discussion Papers in Economics from University of Munich, Department of Economics

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.

Keywords: Underpricing; Demand Rationing; Resale Deterrence (search for similar items in EconPapers)
JEL-codes: D42 D45 L12 (search for similar items in EconPapers)
Date: 2007-01
New Economics Papers: this item is included in nep-com, nep-mic, nep-mkt and nep-spo
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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenec:1357

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