This section presents a systematic analysis of how key outcomes vary with beer price ceilings, holding all other parameters constant at their baseline values.
Methodology¶
We simulate stadium optimization across beer price ceilings ranging from $5 to $20, computing optimal ticket prices and all downstream effects. This comparative statics exercise reveals:
Stadium response: How ticket prices adjust to compensate for constrained beer revenue
Quantity effects: Changes in attendance and consumption
Revenue implications: Decomposition into ticket vs beer revenue
Welfare impacts: Distribution across consumers, producers, and society
Key Results¶
Stadium Pricing Response¶
Figure 1:Left: Ticket prices rise by ~$6.85 (+9.7%) as beer ceilings tighten to $7. The rise is less dramatic than in previous calibrations but still significant. Right: Beer price tracks the ceiling when binding.
Economic mechanism: When beer revenue margin collapses, the stadium shifts toward ticket revenue. This “revenue substitution” effect is amplified by two-way complementarity.
Attendance and Consumption Trade-offs¶
Figure 2:Left: Attendance falls only -5.7% at $7 ceiling (stadium remains near capacity). Right: Total beer consumption doubles (+98.3%) due to lower prices, despite the slight attendance drop.
Key insight: The intensive margin (beers per fan) dominates the extensive margin (number of fans). Fans consume significantly more beer when it is cheap.
Revenue Decomposition¶
Figure 3:Ticket revenue rises to compensate for lost beer margins. Total revenue actually increases slightly (+4.5%) because demand for cheap beer is high and ticket prices rise, but profit falls due to the cost of serving more beer.
Welfare Analysis¶
Figure 4:Top left: Producer surplus (stadium profit) falls by ~-9.0% at $7 ceiling. Top right: Consumer surplus rises by ~5.3%. The benefit of cheap beer outweighs the cost of slightly more expensive tickets for the average fan. Bottom left: Externality costs explode (+98.3%) as consumption doubles. Bottom right: Social welfare increases slightly (+0.8%), as the gain in Consumer Surplus outweighs the loss in Profit and the increase in Externalities.
Combined Welfare View¶
Figure 5:The welfare effects are mixed: Consumers win (+5.3%), the Stadium loses (-9.0%), and Society bears more external costs (+98.3%). The net effect is a small positive, illustrating the “Second Best” theory where regulating a monopolist can improve welfare even with externalities.
Policy implication: While the ceiling improves total social welfare slightly, it does so by shifting costs to society (crime, health) and the stadium, while consumers benefit. A Pigouvian tax would address the externality directly without these distortions.
Per-Fan Consumption¶
Figure 6:Per-capita consumption more than doubles. At $7, average fan consumes 2.10 beers vs 1.00 at baseline. This drives the externality cost increase.
Robustness Check: Is this just complementarity?¶
A common critique is that the “ticket price rise” result depends entirely on the assumption that beer and tickets are complements (). We tested this by varying the cross-price elasticity from 0.0 (independent) to 0.3 (strong complements).
Figure 7:Ticket prices rise by over $5 even if beer and tickets are completely independent goods (). The result is robust to the complementarity assumption.
Surprising Result: Even with zero complementarity, ticket prices rise by $5.87. Why? The internalized cost function couples the markets. Cheaper beer leads to more consumption, which increases the “rowdiness/security” cost per fan. To the stadium, this looks like an increase in the marginal cost of serving a fan, so they raise ticket prices to cover it.
Quantitative Summary: $7 Ceiling vs Baseline¶
| Metric | Baseline ($12.51) | $7 Ceiling | Change |
|---|---|---|---|
| Prices | |||
| Beer price | $12.51 | $7.00 | -44% |
| Ticket price | $70.44 | $77.29 | +9.7% |
| Quantities | |||
| Attendance | 46,537 | 43,894 | -5.7% |
| Beers/fan | 1.00 | 2.10 | +110.2% |
| Total beers | 46,488 | 92,178 | +98.3% |
| Revenue | |||
| Profit | $3.42M | $3.11M | -9.0% |
| Welfare | |||
| Consumer surplus | $11.4M | $12.0M | +5.3% |
| Externality cost | $0.2M | $0.4M | +98.3% |
| Social welfare | $14.7M | $14.8M | +0.8% |
Comparison with Leisten (2025)¶
Our quantitative results confirm Leisten (2025) theoretical prediction: beer price ceilings cause ticket prices to rise. We extend his analysis by:
Magnitude: $7 ceiling → $6.85 ticket increase.
Two-way complementarity: Beer prices affect attendance in our model.
Welfare decomposition: We find that consumers can benefit (CS rises) even if tickets rise, if the beer price drop is large enough.
Policy Implications¶
Trade-offs are complex: Ceilings help consumers and slightly improve total welfare, BUT they drastically increase negative externalities (crime/health).
Pigouvian taxation is likely superior: It targets the externality directly.
Stadium incentives: The stadium loses profit (-9.0%), giving them incentive to fight this policy.
General equilibrium response: Ticket prices rising 9.7% is a significant adjustment that policymakers must anticipate.
- Leisten, M. (2025). Twitter Thread: Economic Analysis of Beer Price Controls at Yankee Stadium. Twitter/X. https://x.com/LeistenEcon/status/1990150035615494239