Thomas Baranga Quoted on the Economics of Ticket Prices
How Much Tickets Cost and Why
11/02/2011
Roxana Popescu,
Voice of San Diego
How did the San Diego Symphony decide to charge $20 to $96 for single tickets this season? Why is an adult admission to the San Diego Natural History Museum precisely $17? How do theaters decide how many seating sections to have and how much to charge for each?
A little economics refresher should help us answer those questions.
Outside a monopoly, prices for goods and services — an orchestra concert, a museum visit, a play — are a function of two things. One is how much that good or service costs to create — for example, buying works of art, hiring singers, paying salaries and rent. Next, you have to determine how much your potential buyer is willing to spend, based on supply and demand. How many people want tickets and how many tickets are available? How big is a museum or auditorium, and how many hours can it be open and ready for action? You'd pay a lot for Yo-Yo Ma play in your drawing room and a lot less to hear him at Cricket Wireless Amphitheatre with tens of thousands of other fans. Rock on.
Many other things affect prices, but to keep things simple let's look at two: Competition and marginal costs. If you're a theater putting on "Harvey," you want to be similarly priced with similar theaters. But not always. If you charge more you might seem overpriced — or top notch. If you charge too little, you could seem like a good value — or subpar.
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Thomas Baranga is Assistant Professor of International Economics at IR/PS. His research interests are in international trade, international finance and macroeconomics. His doctoral thesis explored the effects of exchange rate regimes on international trade. He is currently working on the effects of the financial crisis on trade flows, and the interactions of housing and labour markets.
