College Ticket Pricing
Charles Clotfelter of Duke University has a book coming out soon, called Big-Time Sports in American Universities. He offers examples of a number of schools that have great teams in one major sport (for example, football), and mediocre teams in another (say, basketball). For their mediocre team, the arena is often half-empty, even though the ticket price is quite reasonable. There is excess supply. For the powerhouse team, the ticket price is also reasonable-but at that price there is a huge excess demand for seats.
How to remove the shortage and equilibrate the market? Simple:?at one school, the price of a pair of season tickets is $1,000; to be eligible to pay this amount, one must make an annual “charitable gift” of $7,000 to the university. Presumably this contribution is sufficient to equilibrate supply and demand. I find this quite disgusting-but I suppose it is more desirable for the university to earn the revenue than to have speculators profit by purchasing the tickets and then re-selling them at the market price, although I would bet that some season ticket-holders do scalp tickets on games that they can’t attend for personal reasons.