Thursday, March 11, 2010

My seat to the game cost 5.00 more and I am GRATEFUL!!!

From The Miami Herald: "For $5 more, Miami Dolphins fans can have it made in the shade"...
This is an example of a firm capturing consumer surplus.  They can identify a quantity of fans who are willing and able to purchase a seat at a price higher than the equilibrium price based on an advantage  (location)---shade! This is an example of  third degree price discrimination...
In third degree price discrimination, price varies by attributes such as location or by customer segment, or in the most extreme case, by the individual customer's identity; where the attribute in question is used as a proxy for ability/willingness to pay.
There are different degress of price discrimination (see HERE) and it seems the selling of the shaded seat falls into this category (arguements could be made for 1st degree discriminaton, i suppose)...
A Harvard business professor has confirmed for the Miami Dolphins something fans have known for years: Midday in the September sun at Sun Life Stadium, it gets excruciatingly hot. So as part of the first increase in Dolphins ticket prices in three years, there will be a higher cost for shade. Fans sitting on the shady side of Sun Life will pay about $5 more per ticket per game than fans roasting in the sun on the opposite side. The south side seats also have the advantage of being behind the Dolphins' bench.  The increase, part of a 2010 season pricing scheme that will see higher ticket costs for 56 percent of seats, was announced Thursday. The Dolphins decided to overhaul their pricing structure after hiring Harvard business professor Robert Stavins and specialists at MIT to do an analysis.
This is good economics, but is it "good business" in terms of publicity and the perceptions that prices are already too high for venues like this.
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