Beer Price Controls at Yankee Stadium: An Economic Analysis

We analyze the effects of a hypothetical $7 beer price ceiling at Yankee Stadium using a heterogeneous consumer model with drinkers (40%) and non-drinkers (60%). The model predicts that total beer consumption increases 77% despite attendance falling 6%, because the stadium raises ticket prices 10% to offset lost beer margin, and per-fan consumption doubles.

The key mechanism is selection effects. When ticket prices rise, non-drinkers (who only see the price increase) reduce attendance by 11.5%, while drinkers (who gain value from cheaper beer) reduce attendance by only 6.3%. This shifts crowd composition from 40% to 41.4% drinkers. Decomposing the consumption increase: the intensive margin (each fan drinks more) contributes 116%, while the extensive margin (fewer attendees) contributes -16%.

Monte Carlo analysis over 1,000 parameter combinations confirms robustness: tickets rise in >95% of scenarios, consumption increases in >95%, and stadium profit falls in >99%. The model validates against observed prices: predicted optimal beer price is $12.51 versus $12.50 observed.

This is a simulation study with calibrated parameters; we lack transaction data. 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: H23 (Externalities), L83 (Sports), D42 (Monopoly)

Keywords: price controls, sports economics, complementary goods, selection effects, heterogeneous consumers