Entry and pricing on Broadway

ABSTRACT

This article investigates the pricing decisions of Broadway shows. We find evidence that incumbent Broadway shows lower prices several weeks prior to the opening of a new show. In addition, prices are lower when the threat of competition, due to more entrants, is larger. A decomposition suggests that prices are more important than quantities for changes in revenue prior to entry and that this pattern reverses after entry occurs.

KEYWORDS:

• Entry accommodation
• Broadway
• event study
• quantile regression

JEL CLASSIFICATION:

• L1
• L2

Acknowledgement

We thank Briggs Depew for feedback.

Disclosure statement

No potential conflict of interest was reported by the authors.

Supplemental material

Supplemental data for this article can be accessed here.

Notes

¹ See Online Appendix A.

² Evidence on the existence of a public date for the event of entry is found in numerous local newspapers and more recently in websites such as the Internet Broadway Database (http://www.ibdb.com/) and the New York Theatre Guide (http://www.newyorktheaterguide.com/whatson/opening.htm) which post the names and dates of new shows as early as 6 months in advance.

³ Note that since we use a log-linear specification the percentage change is equal to .

⁴ See Online Appendix B.

⁵ Note that the increasing role of prices after is associated with increases in prices.