Profiting from Partial Allowance of Ticket Resale

Geng, Xianjun; Wu, Ruhai; Whinston, Andrew B.

doi:10.1509/jmkg.71.2.184

Cited by 30 publications

(14 citation statements)

References 14 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…-Speculator resale decreases provider profits under multiperiod pricing; consumer resale increases provider profits under multiperiod pricing unless the capacity is large. Geng et al (2007) study a two-period model where the capacity provider changes the price in period 2 (multiperiod pricing) and assume consumers are only allowed to resell before the capacity provider's price change (they call this pricing scheme "partial resale"). In contrast, our paper assumes that initially tickets can only be sold by the capacity provider, but after a later date, tickets are also available from the secondary market till the event takes place (currently it is possible to buy a ticket from StubHub only a few hours before the start of an event).…”

Section: Geng Et Al (2007) -Consumersmentioning

confidence: 99%

“…In contrast, our paper assumes that initially tickets can only be sold by the capacity provider, but after a later date, tickets are also available from the secondary market till the event takes place (currently it is possible to buy a ticket from StubHub only a few hours before the start of an event). Furthermore, Geng et al (2007) assume no resale transaction cost. In contrast, we are interested in whether increases in the resale transaction cost benefit or hurt the capacity provider.…”

Section: Geng Et Al (2007) -Consumersmentioning

confidence: 99%

See 1 more Smart Citation

Should Event Organizers Prevent Resale of Tickets?

2014

View full text Add to dashboard Cite

We are interested in whether preventing resale of tickets benefits the capacity providers for sporting and entertainment events. Common wisdom suggests that ticket resale is harmful to event organizers' revenues and event organizers have tried to prevent resale of tickets. For instance, Ticketmaster has recently proposed paperless (non-transferrable) ticketing which would severely limit the opportunity to resell tickets. We consider a model that allows resale from both consumers and speculators with different transaction costs for each party. Surprisingly, we find that this wisdom is incorrect when event organizers use fixed pricing policies, in fact event organizers benefit from reductions in consumers' (and speculators') transaction costs of resale. Even when multiperiod pricing policies are used, we find that an event organizer may still benefit from ticket resale if his capacity is small. While paperless ticketing is suggested as a way to reduce ticket resale and prevent speculators from buying tickets, our results suggest that it may reduce the capacity providers' revenues in many situations. Instead, we propose ticket options as a novel ticket pricing mechanism. We show that ticket options (where consumers would initially buy an option to buy a ticket and then exercise at a later date) naturally reduce ticket resale significantly and result in significant increases in event organizers' revenues. Furthermore, since a consumer only risks the option price (and not the whole ticket price) if she cannot attend the event, options may face less consumer resistance than paperless tickets.

show abstract

Section: Geng Et Al (2007) -Consumersmentioning

confidence: 99%

Section: Geng Et Al (2007) -Consumersmentioning

confidence: 99%

Should Event Organizers Prevent Resale of Tickets?

2014

View full text Add to dashboard Cite

show abstract

“…Geng, Wu, and Whinston [10] introduce a resale market into the model of Xie and Shugan [12] and analyze how reselling influences the profit of the firm. They show that reselling does not always reduce the profit.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Hence, if firms ignore time preferences in their decision making, they may charge suboptimal prices or even choose a wrong pricing strategy. Although advance selling is well connected to the aspect of intertemporal choice-firms as well as consumers must decide when they sell or buy-the effect of time preferences on optimal prices and the profitability of advance selling was not analyzed, neither in the seminal paper of Shugan and Xie [2] nor in the extensions of their model [8][9][10][11][12], nor in Sainam, Balasubramanian, and Bayus [13] who analyzed the profitability of advance selling in comparison to option pricing. Consequently, it is not known if different decisions occur in case firms do not ignore time preferences.…”

Section: Introductionmentioning

confidence: 99%

Effect of Time Preferences on Optimal Prices and Profitability of Advance Selling

Schaaf

Skiera

2014

Cust. Need. and Solut.

View full text Add to dashboard Cite

In advance selling, firms announce that they will charge different prices for those who buy early vs. those who buy late. Previous literature showed that advance selling allows for increased profits in a rather wide range of settings, which typically hold in many service industries. Despite ample evidence that consumers exhibit higher discount rates than firms, it is not clear how differences in time preferences affect optimal prices of advance selling. This article develops an analytical model for optimal prices in advance selling that accounts for such differences in time preferences. In contrast to previous literature, the results indicate that advance selling quickly becomes less profitable than spot selling if consumers discount at a higher rate than firms (and vice versa). They also show that previous findings about the optimality of different advance selling strategies are unaffected if consumers and firms discount at the same rate, despite different optimal prices. Another major implication of our work is that analytical models and managerial decision making should consider time preferences if payment and consumption might occur at different points in time.

show abstract

“…However, if we assume that customer types may change ex post, then the existence of an option exchange market helps in some cases. A detailed analysis of when a spot exchange market helps increase a monopolist's profit can be found in Geng, Wu, and Whinston (2007). Moreover, ex post exchange reduces the customer's ex post risk of purchasing options.…”

Section: Spot Exchange Options Marketmentioning

confidence: 99%

Option Contracts and Capacity Management—Enabling Price Discrimination under Demand Uncertainty

Fang

Whinston

2007

Production and Operations Management

View full text Add to dashboard Cite

We explore using an option contract as a price discrimination tool under demand uncertainty. In our capacity game model, a monopolistic supplier has to build capacity before observing the uncertain demand. The demand is generated by two potential customers, who privately know their own types. The types could be either high or low, differing in willingness to pay for each unit of demand. To discriminate between the customer types, the supplier designs option contracts so that only the high type will buy options in advance. The high type will do so because the options can hedge their risk of demand loss when capacity is tight. The supplier profits in three ways. First, the high type customers pay higher marginal prices on average. Second, the high type customers' demand is satisfied as a first priority, guaranteeing allocation efficiency. Third, the supplier can observe the number of options being purchased and so determine customer types, improving capacity investment efficiency. We compare our results to those of classical second degree price discrimination. We show that our proposed framework guarantees the same level of supplier profit even when the supplier cannot discriminate between the customers by bundling products.

show abstract

Profiting from Partial Allowance of Ticket Resale

Cited by 30 publications

References 14 publications

Should Event Organizers Prevent Resale of Tickets?

Should Event Organizers Prevent Resale of Tickets?

Effect of Time Preferences on Optimal Prices and Profitability of Advance Selling

Option Contracts and Capacity Management—Enabling Price Discrimination under Demand Uncertainty

Contact Info

Product

Resources

About