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Journal of Cultural Economics

, Volume 40, Issue 4, pp 529–545 | Cite as

Fairness constraints on profit-seeking: evidence from the German club concert industry

  • Hendrik Sonnabend
Original Article

Abstract

Unlike Kahneman et al. (Am Econ Rev 76(4):728–741, 1986) iconic snow shovel, live music is a performance good that fans attach a particular value to. Hence, an artist’s pricing decision might differ from standard rent-seeking behavior. In this paper, I propose a model that incorporates fairness concerns into the pricing decision for concert tickets. The hypotheses derived from this model are tested on data from the German club concert industry. The results are consistent with the model: Although (1) price dispersion is the dominant pricing strategy in the club concert industry and artists prefer to perform on a Friday or Saturday night, (2) artists do not set higher prices on the weekend. These results are consistent with fairness constraints, but are difficult to explain within a standard profit maximization framework. As a third result, (3) the data reveal that ticket prices are positively correlated with a city’s number of inhabitants .

Keywords

Fairness Behavioral pricing Live music performance Kinked demand 

JEL Classification

D42 L11 L12 Z11 

Notes

Acknowledgments

I would like to thank Joachim Grosser, Hans-Jörg Schmerer and other faculty members for helpful comments.

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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of HagenHagenGermany

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