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on Sports and Economics |
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Issue of 2007‒01‒23
two papers chosen by Joao Carlos Correia Leitao University of the Beira Interior |
| By: | Eichhorn, Christoph; Sahm, Marco |
| Abstract: | We examine the pricing decision of a multi-product monopolist in a two-sided market where the type structure of buyers on one side of the market is an important determinant of profit on the other side. In this situation it might be optimal to set prices below the maximum sellout price and to ration demand by a random mechanism in the first market to reach a type distribution more favorable for sales in the other market. The model establishes demand quality as an alternative link between markets in addition to standard quantitative effects and explains frequently observed underpricing, e.g. in the (sports) entertainment industry. It also provides an explanation for the effort a monopolist incurs to deter from resale. |
| Keywords: | Underpricing; Demand Rationing; Resale Deterrence |
| JEL: | L12 D42 D45 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:1357&r=spo |
| By: | Stennek, Johan (Research Institute of Industrial Economics) |
| Abstract: | Sports organizations, Hollywood studios and TV channels grant satellite and cable networks exclusive rights to televise their matches, movies and media contents. Exclusive distribution prevents viewers from watching attractive programs, and reduces the TV-distributors incentives to compete in prices. This paper demonstrates that exclusive distribution may also give providers of contents incentives to invest in higher quality and, as a result, force competitors to reduce their prices. Exclusive distribution may benefit all viewers, including those who are excluded |
| Keywords: | Exclusive Contracts; Quality; Bargaining; Avertising; Investment |
| JEL: | C78 D43 K21 L42 |
| Date: | 2007–01–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0691&r=spo |