Real Options Applied to Consumer Goods: Maximizing Profits and Fan Welfare

Jason P. Berkowitz and Kurt W. Rotthoff

Journal of Sports Economics, 2023, vol. 24, issue 2, 139-158

Abstract: The use of pre-sale options for tickets is underutilized in sports. In this study, we show that the use of pre-sale options increases profits, but also increases consumer utility—making both parties better off. Thus, the efficiency gains and profit gains make incorporating options with advanced selling, as opposed to just advanced selling, an optimal strategy. Through this ticket pricing strategy, the organizer can realize a significant increase in profits from a separating equilibrium pricing strategy while simultaneously consumer welfare increases as fans know, with certainty, they have tickets to the game if their team participates. If these options were offered by participants instead of the organizer it also allows the participant to smooth their revenues over time.

Keywords: option pricing; pricing under uncertainty; event tickets; consumer options (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/15270025221111791 (text/html)

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:sae:jospec:v:24:y:2023:i:2:p:139-158

DOI: 10.1177/15270025221111791

Access Statistics for this article

More articles in Journal of Sports Economics
Bibliographic data for series maintained by SAGE Publications ().