Consumer Demand for the Baseball Experience: Uncertain Demand with a Capacity Constraint

Abstract

Suppose consumers demand a composite good called "baseball experience" that incorporates the value received from both attending the game in person and purchasing concessions at the stadium. It is shown that when the firm maximizes the total profit from tickets and concessions, the ticket price is between the competitive and simple monopoly prices. Further, the paper considers uncertain demand and a capacity constraint, which are shown to raise the finn's marginal cost and make the ticket price higher and "stickier" than in the certainty model. The paper provides some insights into two open questions from the empirical sports literature (JEL D4, D81).