Estimation of Demand Function for Performing Arts: Empirical Analysis

A. Ozhegova and Evgeniy Ozhegov
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A. Ozhegova: National Research University Higher School of Economics, Perm, Russia

Journal of the New Economic Association, 2018, vol. 37, issue 1, 87-110

Abstract: Government-subsidized theatres in Russia aim to increase both revenue and number of tickets sold. Achievement of such a goal is closely connected with study of theatre tickets demand function focusing on the estimation of price elasticity of demand. Previous papers studied price elasticity of demand for theatrical performances provide controversial results. Estimates of price elasticity varies with countries, theatres, segments of theatre audience and even with level of data aggregation. Ticket sales and price data aggregation at the national level or theatre level typically does not allow to control for the differences in produced cultural goods quality. Incorrect control or ignoring of a theatre, performances and seats quality leads to a problem of omitted variables and bias in price elasticity estimates. In this paper we employ disaggregated ticket sales data for four seasons of Perm opera and ballet theatre and estimate the price effect on the theatrical demand for various performance types and seats in the hall. We use censored quantile regression to estimate the parameters of theatre demand function. We reveal the weak elasticity of demand for Perm opera and ballet theatre. We also show that ignoring the limited capacity of the theatre hall, characteristics of performances and seats quality leads to biased estimates of demand function parameters.

Keywords: demand; theatre; cultural economics; price elasticity (search for similar items in EconPapers)
JEL-codes: C24 D12 Z11 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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