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The Revenue Gains from Multi‐Tier Ticket Pricing: Evidence from Pop Music Concerts
Author(s) -
Eckard E. Woodrow,
Smith Marlene A.
Publication year - 2012
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.2549
Subject(s) - ticket , revenue management , revenue , dynamic pricing , economics , pricing strategies , microeconomics , price discrimination , sample (material) , market segmentation , marginal cost , business , econometrics , finance , computer science , computer security , chemistry , chromatography
We provide empirical estimates of the revenue benefits of multi‐tier pricing at a major US pop music venue. Our unique sample includes data on the number of tickets sold at every price. Mean revenue gain from multi‐tier pricing is estimated to be about $20,000 per show, a 4.2% increase over uniform pricing, although the gains were as high as 21.2% for one performer. We also provide evidence that customer segmentation by income is a likely motive of multi‐tier pricing and, for the first time, that the standard assumption of zero marginal cost of additional venue attendees is valid. Copyright © 2012 John Wiley & Sons, Ltd.