Subsidized Monopolists and Product Prices: The Case of Major League Baseball (PDF; 78 KB)
Source: International Association of Sports Economists
“In this paper, I analyze the setting of ticket prices when teams receive subsidization from the public. I model teams as entertainment providers, where entertainment is generated by selling wins and amenities. I argue that subsidization of teams generally comes from subsidizing the amenities in and surrounding the teams’ stadiums. Subsidization of the amenities lowers the marginal cost of providing them to fans and should drive ticket prices lower. The empirical analysis suggests that this is the case.”

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