Substitute effects between Lotto and Big Lotto in Taiwan

Abstract

Lotto was inaugurated in January 2002 and immediately became a popular activity in Taiwan. The purpose of this investigation is to examine the effective price elasticity of Big Lotto and the substitute effects between Lotto (6/42) and Big Lotto (6/49). The analytical results can provide suggestions to the Taipei Bank on ways to improve lottery sales. The empirical findings of investigation include: (1) no significant substitutive or complementary relationships exist between Big Lotto and Lotto in Taiwan (2) the effective price elasticity of Big Lotto is −0.145, Taipei Bank can increase the revenue gained from Big Lotto by increasing the effective price.

Acknowledgement

The authors would like to thank the Taipei Bank for supporting this research.