Question
We return to the Stanford Stadium pricing problem in Section 5.4, assuming a capacity of 60,000 seats and the dem and curves for students and
We return to the Stanford Stadium pricing problem in Section 5.4, assuming a capacity of 60,000 seats and the dem and curves for students and for the general public as given in Equations 5.1(General Public: dg(pg) = (120,000-1,000pg)+) and 5.2(Students: ds(ps) = (20,000 - 1,250ps)+). Assume that 5% of the general public will masquerade as students (perhaps using borrowed ID cards) in order to save money. Assuming that Stanford knows that, what are the optimal prices for student tickets and general public tickets it should set in this case? What is the total revenue, and how does it compare to the case without cannibalization? What does this say about the amount that Stanford would be willing to pay for such devices as photo ID cards in order to eliminate cannibalization?
a. Optimal prices with 10% buy down or cannibalization
b. Total revenue vs the base case without cannibalization
c. What is the maximum amount the university would be willing to pay annually for a photo ID card scanner system if there are 10 home games every year?
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