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Changes in Habitual Attending in Korean Baseball Games

Hayley Jang (Sogang University), Young Hoon Lee (Sogang University)

Abstract: There have been extensive studies on inelastic ticket pricing of sports games. Microeconomic theory suggests that a baseball team with local monopoly power sets its ticket price at elastic region under the profit-maximization assumption. However, empirical studies found inelastic pricing. One of the explanations for this inelastic ticket pricing puzzle is habitual consumption. Local monopolists (professional sports team) have incentives to set current ticket price low for future attendance if they maximize their life-time profit, since sports games are habit forming. That is, not only current consumption but also past consumption affects the current utility under the time non-separability preference assumption. Lee and Smith (2008) applied the addiction model to both Major League Baseball(MLB) and Korean Baseball Organization (KBO). They provided empirical evidence there are statistically significant and strong habitual attending in MLB, but no significant habitual pattern of attendance in KBO. This paper re-evaluates KBO by extending the sample period since the fan demand and fan culture has been dramatically changed recently. In particular, it tests whether any structural change in habit-formation of attendance in KBO occurs in 2000s and estimates the degree of habitual attending if it does.

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