DP8967 The Pricing of Art and the Art of Pricing: Pricing Styles in the Concert Industry

Author(s): Pascal Courty, Mario Pagliero
Publication Date: May 2012
Keyword(s): Behavioral pricing, exploitation of market power, Fair pricing, Price discrimination, Pricing style, Rationing
JEL(s): D42, D45, L21, L82, Z11
Programme Areas: Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=8967

We document the existence of pricing styles in the concert industry. Artists differ in the extent to which they rely on second- and third-degree price discrimination and in how likely they are to sell out concerts. Most strikingly, artists who use multiple seating categories are more likely to vary prices across markets and less likely to sell out concerts. These patterns are difficult to explain under a standard profit maximization paradigm. The hypothesis that artists differ in their willingness to exploit market power provides a plausible framework for explaining these patterns in artist pricing style.