Price dispersion reflects ignorance in the marketplace in which different prices exist from the same or different sellers for a similar good. One of the sources of price dispersion is uncertain demand for a business’s good or service. Ticket markets are good opportunities to examine a firm’s pricing strategy under demand uncertainty, because professional sports teams have to price their tickets well in advance of the actual event and before actual demand is known. The purpose of the present research is to examine the relationship between price dispersion and regular season average attendance in Major League Baseball. Using a two-step generalized method of moments (GMM) model, the present research finds that an increase in price dispersion leads to a decrease in average attendance.
Brian P. Soebbing is with the School of Kinesiology at Louisiana State University in Baton Rouge, LA. Nicholas M. Watanabe is with the Department of Parks, Recreation, and Tourism at the University of Missouri in Columbia, MO. Address author correspondence to Brian Soebbing at email@example.com.