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The paradox of inelastic sports pricing
Author(s) -
Porter Philip K.
Publication year - 2007
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.1301
Subject(s) - ticket , mistake , revenue , marginal cost , microeconomics , marginal profit , economics , profit maximization , marginal utility , profit (economics) , maximization , phenomenon , utility maximization , price discrimination , marginal revenue , mathematical economics , computer science , finance , law , political science , philosophy , computer security , epistemology
Rodney Fort's (2004) article in Managerial and Decision Economics attempts to explain the recurrent phenomenon of inelastic ticket pricing in professional sports. In his explanation, Fort mistakenly substitutes the marginal revenue generated by the acquisition of talent for the marginal revenue generated by lowering the gate ticket price. This article corrects the mistake, pointing out that inelastic ticket pricing is still inconsistent with profit maximization. In addition, it is demonstrated that the marginal revenue generated by additional talent cannot be negative. Copyright © 2007 John Wiley & Sons, Ltd.