Supply and demand in baseball Essay Example | Topics and Well Written Essays - 1500 words

Supply and demand in baseball - Essay Example Over the years, various studies show that participation in professional baseball games have steadily declined. There are many reasons attributed to this condition of reduction in demand for baseball as indicated by the lower ticket sales based on volume. One reason cited is that the ticket prices have risen sharply in the past 15 years. This is accompanied by increases in the price of related goods or complementary goods to baseball games live, including parking fees and food prices. (Wood, 2004) To illustrate this point, Chicago-based research company Team Marketing Research asserted that on the average, a family of four is estimated to spend about $153 for watching in big-league ballparks as at 2004. This figure represents nearly 3% increase from 2003. Similarly, Philadelphia Phillies fans are estimated to spend around $188 for a family of four. This is greater than a 25% jump from the cost in the previous year. (Wood, 2004) Apart from this, another reason mentioned is the change in the kind of spectators who are purchasing baseball tickets. It is seen that corporations and other businesses are buying in bulks to impress clients by giving away complimentary tickets. Note that these business entities would opt for the premium seats such as those located in blocks behind the home plate and in covered boxes. In this regard, baseball owners are able to jack up the price for seats in these locations as there is an assured demand for such. Moreover, as these owners attempt to recoup the increasing cost of doing business, they boost the ticket prices particularly for those in prime locations (Wood, 2004). For instance, team owners have to contend with the meteoric rise in their factors of production, especially labor. Wage is often perceived as the primary component of business cost that leads to the increase in price (Dornbusch, Fisher& Starkz, 2002). In professional baseball, it is seen that teams belonging to the top 25% of revenue-earners have experienced an increase of $28 million on the average between 1995 and 1999 alone (Bergen, 2000). As team owners are tied up with multi-year and multi-million dollar contracts with their players, they attempt to recover the substantial wage cost by increasing ticket prices. Given the above, it could be concluded that inflation has not only affected the basic goods but the baseball ticket prices as well. This could be better explained with the aid of the graph (Change in Demand for Baseball Game Tickets). Based on the graph, it is exhibited that the price of baseball tickets has increased form D0 to D1 due to the consistent demand of corporate buyers coupled with the increasing cost of operating a baseball team. In macroeconomic terms, the "inflation" that has affected baseball tickets may be classified as both cost-push and demand-pull. These means that the steady demand for baseball tickets as well as the rise in the cost of doing business (Samuelson & Nordhaus, 2002) has led to the hiking up of baseball ticket prices. However, as baseball fans, especially families, have been hit by inflation, thus increasing the