Price Dynamics in Perishable Goods Markets: The Case of Secondary Markets for Major League Baseball Tickets.
Sellers of perishable goods increasingly use dynamic pricing strategies as technology makes it easier to change prices and track inventory. This paper tests how accurately theoretical models of dynamic pricing describe sellers’ pricing behavior in secondary markets for event tickets, which are a classic example of a perishable good. It shows that some of the simplest dynamic pricing models describe seller behavior very accurately, and they explain why sellers cut prices dramatically, by 40% or more, as an event approaches. The estimates also imply that dynamic pricing is valuable, raising the average seller’s expected payoff by around 16%.