Segmenting the market
This chapter deals with two methods of dynamic pricing in turn. It turns to the other form of dynamic pricing, where the price changes according to revealed demand after tickets have initially gone on sale. The chapter argues that a seat at an arts event is like a seat on an airline trip or a room for a night in a hotel, in that these are, from the point of view of the seller, completely perishable goods. Specifically, think about how consumers make choices in purchases of art and entertainment. Consumers are faced with a vast array of choices regarding books, recordings, movies, and performances. A key factor that guides consumer choice in the arts is the behavior of other consumers. The theatre announces in advance that there will be dynamic pricing as follows: for evenings where demand is particularly strong prices might increase, and for quieter nights it would decrease.