Study_GuideEconOfSports

Study_GuideEconOfSports - I. The Franchise 1) Who is the...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
I. The Franchise 1) Who is the franchise? i. The owners as individuals ii. Purpose to maximize profit for the team 2) Revenue i. Ticket Sales 1. Luxury seats keep money 2. Ticket pricing strategies (bundling, price discrimination) Ticket prices in monopolist market 3. Examples of how franchises effect the demand curve 4. Demand = P = 100-2Q Capacity = 15 5. Algebraically: P* = 70 a. Q* = 15 b. Q* = 25 c. P* = 50 d. TR = PQ = (100-2Q)(Q) = 100Q – 2Q 2 e. MR = dTR = 100-4Q f. MR = MC which is 0 until they hit Q* 6. Price discrimination – used to maximize profits a. 1 st degree price discrimination i. Who wants to go for $5? $2? $1? – can only do once. Charge everyone their marginal willingness to pay. b. 2 nd degree price discrimination i. Charge different prices based on quantity of the good. ii. Group Rates – Season Tickets (if you buy 20 tickets then you will pay less) NOT bundling because bundling would be combining different goods. c. 3 rd degree price discrimination
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
i. Charge different prices for different parts of the market – Senior Citizen Discount, Student Discount, Ladies Identify, Illegal ways(can’t discriminate base of race and gender) d. Bundling – packaging different goods together i. Disney world – Airfare, park, and hotel together; Free hot dog with tickets 7. Promotions used to increase profits a. Add bobble head nights, fireworks night, increases demand, Jordan comeback 8. Winning increase demand which increases revenue 9. Star athlete - increases demand, helps road attendance more 10. Lower P*? Yes to sellout or to prevent blackout but only if there is enough gains elsewhere 11. How to determine price and quantity in different settings (i.e. competitive
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/04/2011 for the course ECON 3306 taught by Professor Staff during the Spring '08 term at UT Arlington.

Page1 / 7

Study_GuideEconOfSports - I. The Franchise 1) Who is the...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online