
Northwestern Finds a New Solution to the Ticket Pricing Dilemma (2014) - brianbreslin
http://www.forbes.com/sites/kevintrahan/2014/10/21/a-solution-to-the-flawed-way-college-football-teams-sell-tickets/
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esturk
"The idea was that prices would start high, and they would fall in accordance
with demand and the secondary market. Unlike dynamic pricing, where prices can
rise and fall and customers are stuck with the price they pay, tickets under
the “Purple Pricing” plan would only fall, and customers would be refunded to
pay the lowest possible price. The concept is similar to a Dutch Auction."

Another element is the bidding price during the presale round. The bid you
submitted will always be active. Once the price falls to your bidding price,
you will be the first to buy it.

This ensures that those most willing to pay will always get access first. And
it would ensure everyone pays the same price. Intuitively, this would
discourage the secondary market from speculating the price. And if they only
refund the original buyer, then this will further go to harm the secondary
market.

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bduerst
This assumes static demand the entire time leading up to the event (concert,
game, etc.) the ticket is for.

In reality, demand usually peaks sometime right before the event, so you're
still going to have a secondary market taking advantage of the price
differential.

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esturk
Yes, the demand may peak at t=0 and since the price may only fall, there will
still be a secondary market. However, their revenue will be much smaller. The
minimum price for each ticket will be higher do to the falling mechanism. The
discrepancy between what the secondary market will make is then smaller.

~~~
bduerst
If demand peaks at t=0, the second market sellers are going to buy out the
entire supply early where demand and price are the lowest, and then use
economic hold up to inflate their prices even further. All you're doing with
this system is guaranteeing that consumers who want to pay a lot of money
_early on_ are guaranteed to do so.

Considering that this is an imperfect market and the second market sellers are
more knowledgeable, average consumers are going to the ones paying out here,
not the resellers.

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btilly
This is a nice variation on the Dutch auction!

I first learned about the Dutch Auction when Google used it during their IPO.
Wall St hates it because one of the perks of being, or being connected to, an
investment banker is that you get in on IPOs at a good price. With the Dutch
Auction there is no initial IPO pop, and therefore investment bankers lose out
on that profit opportunity.

Google uses another variation of this in Adwords. For each ad they do an
internal auction, and the winning bidder pays the minimum needed to beat the
second place bidder. According to game theory, the correct action for each
bidder to do is to bid exactly what the ad is worth to them. Second guessing
what other people bid is irrelevant.

~~~
barapa
If you care how much the other party pays, then you still have incentive to
second guess their bid.

For example, in an auction fantasy football system, it is in your interest to
make your opponents pay as much as possible for any bid they win. So if you
believe they value a player more than you do, it could be in your interest to
actually bid more than the value you place on the player in order to force
them to pay their maximum bid.

