Heavy Lifting - thoughts and web finds by an economist
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Tuesday, August 03, 2004
I head to Greenville, South Carolina on Wednesday to take a few days off, see some friends and family, and christen our new baby. I know the lack of blogging on my part will disrupt your daily groove...come back next week.
For something to do, why not read my new working paper with Darren Grant "The Dynamics of Multiproduct Pricing: A Principal Components Analysis with an Application to Major League Baseball"
The theory of multiproduct pricing is well developed in stylized models, although a unified theory has yet to be developed. As such, empirical analyses are rarely guided by strong theoretical hypotheses and are therefore scarce and always static. This paper analyses the dynamics of ticket, parking, and concession prices in Major League Baseball for the period 1991-2002 using the well developed, if less often used methodology, of principal components. The approach allows inferences to be formed about the factors underlying intertemporal price variation in the absence of information about costs and demand. The most important factor influencing prices in baseball is a general increase in the demand for baseball, but perhaps surprisingly general demand shifts explain less than half of all price variation. The second most important factor is complementarity between required and voluntary purchases. The third most important factor is complementarity between frequently and infrequently purchased concessions. Secondary empirical analysis confirms these economic interpretations. The results show that the principal components methodology is an effective way to draw inferences about price changes in a multiproduct context using data describing prices alone
Download the paper here.
Send me comments (if you have any) here.
Here are the rest of my working papers - comments always welcome. Cite early and cite often!!
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