David G. Surdam

Author, Speaker, Professor of Economics

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Name That Price: Determining Which Price Variable to Use in Estimating Demand for Major League Baseball Games, 1952-56

Authors: David G. Surdam and Kenneth H. Brown
Publication: Journal of Economics
Publication Date: 2009

Estimating demand for events that have multiple ticket prices, such as sporting, musical, and theater performances requires choosing the relevant price variable. Previous attempts may have suffered from errors in variables and from using ordinary least squares instead of panel data techniques. We estimate the price elasticity of demand for 1950s Major League Baseball games by using both a weighted-average ticket price series and an averagegate- revenue per ticket series in separate equations; the first time a direct comparison of the two series has been done successfully for baseball. The weighted-average ticket price series suffers from its implicit assumption that the proportion of seats sold in the various classifications remains unchanged, regardless of attendance at a particular game. The average-gate-revenue per ticket series proved statistically significant while the former did not.

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