Ticket pricing in the alpine ski industry.
Gerlach, Andrew Robert
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Alpine ski areas worldwide use daily lift-ticket pricing rather than individual ride-ticket pricing. Robert Barra and Paul Romer argue that the ski ride industry is a competitive market and that identical equilibriums and revenues are reached with either pricing method. They also argue that sticky lift ticket prices and lift-line queues are efficient. Lift-ticket pricing dominates because of lower monitoring costs. Tests of their model's predictions, however, do not support their model. A monopolistic ski-lift pricing model is developed. The monopoly model predicts that lift-ticket pricing would dominate the market due to its revenue generating advantages over ride-ticket pricing. Overall the monopoly model predicts the pricing policies that exist in the ski ride market better than the competitive model of Barra and Romer. It is argued that lift-ticket pricing is an indication of the market power most ski areas possess.