Beer Price Controls at Yankee Stadium: An Economic Analysis

What happens when you halve the price of beer at a stadium? We analyze this question using a heterogeneous consumer model distinguishing drinkers (40%) from non-drinkers (60%), motivated by NYC mayor-elect Zohran Mamdani’s transition team exploring stadium price regulations.

Under a $6 ceiling (half the current $12.50 price), the stadium’s optimal response is to raise ticket prices 21%, offsetting lost beer margin. Despite attendance falling 20%, total beer consumption increases 146% because per-fan consumption more than triples. The key mechanism is selection effects: higher tickets disproportionately deter non-drinkers, shifting crowd composition toward drinkers who value cheap beer.

Sensitivity analysis across ceilings from $5-$10 shows these effects scale with ceiling stringency: at $8, tickets rise only 4% and consumption increases 110%; at $5, tickets rise 36% and consumption increases 158%. Monte Carlo analysis confirms robustness: tickets rise in >95% of scenarios across parameter ranges.

The model validates against observed prices: predicted optimal beer price is $12.51 versus $12.50 observed. This tight calibration suggests stadiums already optimize jointly across tickets and concessions. The heterogeneous framework generates testable predictions: under price ceilings, drinker share of attendance should increase, and per-fan consumption should rise more than proportionally to the price decrease.

JEL Codes: D42 (Monopoly), L83 (Sports), L12 (Monopoly Pricing)

Keywords: monopoly pricing, complementary goods, price controls, selection effects, sports economics