This [unedited] guest post is by a student in my EEP100 class (background post).
Please praise/critique/comment on its economic quality and importance to you.
Steven Otto says:While enjoying Barry Zito’s surprisingly dominate start against the Rockies at AT&T Park, I couldn’t resist the urge to purchase the classic baseball treat, cracker jacks. As the salesman walked up the aisle, I signaled him only to realize that I had no cash! As I weighed the rumble in my stomach vs. the excitement of the game, I couldn’t help but wonder how long it would take for one to be able to purchase food, beverages or souvenirs from one’s seat using one’s credit card.
When thinking about this question, a couple things come to mind. First, what are the costs associated with providing this new service to the audience, and second, how much will this increase either the sales of the vendors, or the utility of the fans. In this case, the marginal cost for supplying each vendor with a machine that is capable of both accepting and remembering credit card purchases as well as printing a receipt to the customer is quite high. In regards to the marginal revenue, the returns would be relatively small. For instance, take the average baseball fan. He/she probably goes to the game having some experience or knowledge of the culture behind the game, or at least the environment in which the fans watch the game from. As a result, they generally bring cash to make purchases with from the comfort of their seat, negating the need for a credit card service. One can even take the unusual instance of a person who does not have cash, i.e. me. After sitting with a hungry stomach for an inning or so, I eventually ran to a concessions stand and purchased my cracker jacks at the same price I would have got for them from my seat. Despite a slight inconvenience to me, AT&T Park made the same amount of revenue without the credit card option as they would have if it was offered.
Weeks later, my friend went to another Giants game, but had significantly nicer seats than I did. In fact, his seats were so nice (behind the dugout) that an in-game concessions service was offered where a vendor came to take his order. Much to my surprise, he was given the option of paying by credit card with the same device I had pondered about only a few weeks earlier. However, this new piece of information fits well with my initial thoughts. First of all, the MC is offset by a $2.50 credit card fee, which should more than cover the cost of the device. Second, wealthier people sit in seats where the service is offered, and they are more likely to make larger purchases which is difficult to do with cash. By accepting credit cards, the ball park makes it easier for fans to purchase large amounts of food and souvenirs, a massive source of revenue for the company. Finally, the utility of the wealthier audience members is worth more than the utility of a lowly nose bleeder fan such as myself. Thus the convenience offered to them by accepting credit cards is worth more.
Bottom Line: The marginal cost of vendors accepting credit cards in the stands outweighs marginal revenue for all fans except the wealthiest.
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