The Poole College of Management is pleased to host Necati Tereyagoglu from the Darla Moore School of Business, at the University of South Carolina for an operations/SCM seminar at the Poole College of Management. His talk will take place from 1:30 – 3 pm in Nelson 2302. The title and abstract of the paper are below.

Title: Scoring a Touchdown with Variable Pricing: Evidence from a Quasi-Experiment in the NFL Ticket Markets

Abstract:

Event organizers are moving from fixed to variable pricing. Although this is theoretically shown to enable organizers to respond to changing demand across events, reports point to somewhat limited implementation due to the unpredictable nature of the popularity of an event and to the unaccounted-for dynamics of the resale market. In this paper, we study the implications of a switch to variable pricing using a quasi-experimental data from the National Football League. Applying a difference-in-differences technique with propensity-score weighting, we find that teams switched to variable pricing sold 2.95% additional tickets per game through the primary market. We provide suggestive evidence that this positive effect is due to the quality-signaling nature of variable pricing for price-sensitive customers. Specifically, we find that variable pricing resulted in higher primary market sales at (i) games in hometowns with lower income levels and higher income diversity, and (ii) unattractive games. We also explore whether variable pricing led to any negative effects through the resale market. With variable pricing, although the number of ticket listings in the resale market went up for unattractive games, customers did not list their tickets at lower prices. This indicates that variable pricing did not lead to cannibalization from resale markets. For attractive games, the minimum listing price in the resale market increased. This shows that the display of popularity through teams’ higher prices increased the option-value for these games, and explains why the primary market ticket sales remained steady for attractive games, even after the increase in prices.