London 2012 Price Descrimination Case

Problem №3 Price Discrimination Case

1. What are the major trade-offs Williamson faces?

According to the text, we can find out 4 main trade-offs, which Williamson faced before the Olympic Games 2012.

-They had strong incentive to maximize revenues, so selling as much tickets as possible by the highest affordable price for fans(consumers)

-Maximizing attendance at all events: from Opening Ceremony to the first qualification games in water polo, for example.

-Fill all seats with not just random people, but with “right people” who can improve games by giving extra energy and create an outstanding atmosphere at Olympic events.

-And the last, but not the least, make tickets affordable for all people from all over the world.

So, make prices not so high, that only elite can afford it, but also sell tickets that an average Londoners can buy it.

Trying to find a balance, taking into account all of these considerations, was and still is a huge trouble for organizers of Olympic games and Mr. Williamson was one of that people who tried to solve this problem before and during Olympic games in London 2012

1. What would Williamson do if he only had to maximize the revenue? If he cared about maximum revenue and full attendances but did not care about the “right kind of people”?

If the only goal for Williamson was to maximize revenue, then he should act in the following way. He knew that the strategy of charging high prices for every event would fail, and then a great number of factors should be taken into account, because willingness-to-pay of every group is different and we should consider that.

All analytics considering how popular each king of sport in particular country was available, and, thus, there was a possibility charge maximum possible price for different groups of people. It is common knowledge, that elite groups are ready to pay much more than ordinary people.

Then a strategy oriented on elites could bring high revenues to organizing parties. First, elites can buy and even compete for the best places on the stadium, thus making possible to charge enormous amounts of money for these places. Moreover, there are many rich people in the world and making an advertising before Games and promoting it like the most luxurious and fashionable event of the year could bring nice results. Also, making providing many VIP but not expensive services, special events and ect. can help to increase prices. But, fortunately, maximizing revenues is not only goal for organizers and they do not do such silly things.