Substitute effects between Lotto and Big Lotto in Taiwan

Abstract

Lotto was inaugurated in January 2002 and immediately became a popular activity in Taiwan. The purpose of this investigation is to examine the effective price elasticity of Big Lotto and the substitute effects between Lotto (6/42) and Big Lotto (6/49). The analytical results can provide suggestions to the Taipei Bank on ways to improve lottery sales. The empirical findings of investigation include: (1) no significant substitutive or complementary relationships exist between Big Lotto and Lotto in Taiwan (2) the effective price elasticity of Big Lotto is -0.145, Taipei Bank can increase the revenue gained from Big Lotto by increasing the effective price.

Market Cannibalization Within and Between Gambling Industries: A Systematic Review

“…Of the 19 study observations analysed, 13 indicated substitution (Brown & Rork, 2005;Farrell & Forrest, 2008;Fink & Rork, 2003;Forrest, Gulley, & Simmons, 2004;Garrett & Marsh, 2002;Grote & Matheson, 2006;Mikesell & Zorn, 1987;Roger & Chabi, 2009;Stover, 1990;Tosun & Skidmore, 2004;Walker & Jackson, 2008), two found a complementary relationship (Forrest & McHale, 2007;Purfield & Waldron, 1999), and four found no impact (Farrell & Forrest, 2008;Forrest et al, 2004;Gulley & Scott, 1993;Lin & Lai, 2006). This result indicates that intra-product cannibalization (Srinivasan et al, 2005) is common in the lottery markets.…”

The ‘Who and Why’ of Lottery: Empirical Highlights From the Seminal Economic Literature

“…Grote and Matheson () found evidence of complementarities between a single state lotto game and a larger jackpot multi‐state lotto game. Lin and Lai () found no significant substitutive or complementary relationship between Big Lotto and Lotto in Taiwan.…”

Network externalities in consumer spending on lottery games: evidence from Spain

“…Forrest et al (2004) found some evidence of partial substitution between lotto and instant "scratch-off" lottery tickets, and between Wednesday and Saturday drawings of the UK National Lottery, but no evidence of substitution between different lotto games in the UK. Lin and Lai (2006) found no significant substitutive or complementary relationship between Big Lotto and Lotto in Taiwan. An early example of substitution-cross price effects-between different gambling activities is Forrest et al (2005) in the case of betting and lotto.…”