Inelastic Ticket Pricing Puzzle and Home-City Corporate Social Responsibility as a Business Strategy in the Sports Industry: A Firm Optimization Approach

Authors

  • Yang-Ming Chang Kansas State University
  • Shane Sanders Syracuse University

Keywords:

sports ticket pricing, inelastic sports ticket pricing puzzle, corporate social responsibility, firm optimization

Abstract

Inelastic pricing of sports tickets, an outcome routinely demonstrated in empirical studies, cannot be explained by the conventional hypothesis of pricing under monopoly. In this paper, we incorporate the notion of home-city corporate social responsibility (CSR) as a business strategy into a sports team’s objective in that the team cares not only about team profit, but also about the benefit of its fans/consumers. Such consideration may engender long run fan loyalty, as well as improve prospects for public stadium financing. We show that inelastic sports ticket pricing arises when the weight that a CSR team attributes to fan/consumer surplus is sufficiently large.  Our analysis helps identify the condition under which inelastic sports ticket pricing is consistent with a home-city CSR strategy.         

 

Author Biographies

Yang-Ming Chang, Kansas State University

Chang is Professor of Economics. He received a Ph.D. in Economics from the State University of New York at Buffalo. His research interests include applied microeconomic theory and policy, international trade, and industrial organization. Chang has concentrated his recent research projects on the economics of peace, the general equilibrium analysis of bargaining with endogenous and increasing destruction, as well as issues related to strategic trade policies, regional trade agreements, resource conflict, market competition, and the environment.

Chang’s research work has appeared in a number of peer-reviewed journals, including Journal of Political Economy, Canadian Journal of Economics (2), Economic Inquiry, Southern Economic Journal (3), Labour Economics, Journal of Population Economics (3), Economics Letters (2), Information Economics and Policy (2), International Review of Economics and Finance (2), Open Economies Review, The Journal of International Trade & Economic Development, Japan and the World Economy, Pacific Economic Review, Review of World Economics (Weltwirtschaftliches Archiv), Review of International Economics, Defence and Peace Economics (4), Journal of Sports Economics, The B.E. Journal of Economic Analysis & Policy, Public Finance Review, Review of Law and Economics, European Journal of Political Economy, Journal of Regulatory Economics, and Public Choice.

Chang was an inaugural recipient of the William L. Stamey Teaching Award, first presented in 1988-1989 by the College of Arts & Sciences. Along with teaching undergraduate and graduate courses, Chang has supervised 22 Ph.D. students and 11 Master's students. Students who were under Chang's supervision now work at government agencies or academic institutions. Based on statistics from RePEc, a prominent ranking service in the economics profession, Chang is ranked in the top 5% of economists nationally according to the record of his research with supervised students. As a winner of the Ronald N. Gaches Lifetime Teaching Award, Chang was recognized during the Arts and Sciences commencement ceremony, December 8, 2018, at Bramlage Coliseum. 

Shane Sanders, Syracuse University

With published research in the fields of behavioral sports economics, applied econometrics, and applied game theory, Dr. Shane Sanders joined Syracuse University from Western Illinois University in Fall 2016. At WIU, Sanders served as the Cecil P. McDonough Endowed Professor of Economics.

Sanders is presently an Editorial Board member of the journal Managerial Finance and an Associate Editor of the Academy of Economics & Finance Journal. His research portfolio includes recent peer-reviewed journal articles in the Journal of Sport Economics, Journal of Business & Economic Statistics, JAMA Network Open, Economics Letters, Public Choice, Theory & Decision, European Journal of Political Economy, Mathematical Social Science, and Southern Economic Journal, among others. Sanders also collaborated with Syracuse University assistant professor Dr. Justin Ehrlich, Syracuse University sport analytics graduate Justin Perline ’19 and University of North Georgia economics professor Joel Potter to win a Finalist Prize at the 2019 Carnegie Mellon Sports Analytics Conference Reproducible Research Contest.

Since 2017, Sanders has served as an analytical scouting consultant to a premiere international basketball team. In that time, his work has supported three league championships.

Sanders completed a PhD in economics (with field specializations in econometrics and applied game theory and dissertation work in sports economics) from Kansas State University in 2007. In 2002, he completed a BA in economics with a minor in mathematics from Indiana University Bloomington (Summa Cum Laude, Phi Beta Kappa).

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Published

2022-04-20

Issue

Vol. 3 No. 1 (2022): Mathematics and Sports

Section

Articles