Winning seats: Contingency selling in markets with limited capacity and diverse preferences

Peng Wang, Bikram Ghosh and Yong Liu

International Journal of Research in Marketing, 2025, vol. 42, issue 2, 433-449

Abstract: This paper examines an emerging pricing model, contingency selling, for markets where the product is sold in advance with attribute uncertainty and capacity constraint. A typical example is tournament ticket sales for sports events where it is uncertain whether a particular team will appear in the game. The model enables the firm to sell tickets in a contingent fashion, i.e., some tickets will be valid only if a certain team gets into the game. When consumers (fans) have sufficiently different preferences for different products (games with different teams), selling these “contingent tickets” better matches the price with the willingness-to-pay of particular consumer segments (fans of specific teams). Exploiting state-based price discrimination and belief heterogeneity, contingent tickets generate a higher margin per seat than the traditional way of selling general tickets, especially when there are supply constraints. We further show that contingency selling continues to be advantageous in the presence of secondary markets where consumers purchase tickets in advance but can trade tickets once they know which team will be in the game. We extend our model to examine the impacts of consumer optimism bias and fan base asymmetry. Finally, we compare contingency selling with alternative selling mechanisms to demonstrate the robustness of our results and illustrate the situations where this new selling model is more (or less) advantageous.

Keywords: Advance selling; Contingency selling; Capacity constraint; Nash Bargaining; Pricing (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167811624000892
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ijrema:v:42:y:2025:i:2:p:433-449

DOI: 10.1016/j.ijresmar.2024.10.001

Access Statistics for this article

International Journal of Research in Marketing is currently edited by Roland Rust

More articles in International Journal of Research in Marketing from Elsevier
Bibliographic data for series maintained by Catherine Liu ().