Glastonbury Festival Analysis - Case Study Example

GLASTONBUNRY FESTIVAL ANALYSIS by Student’s name Code+ course name Professor’s name University name City, State Date Glastonbury Festival is a musical and other arts extravaganza that is usually held annually except on the fifth year in Pilton in Somerset, England. The function attracts both local and international fans that come to view the fascinating cultures of different nations. It runs for five days. The function started in 1971 being organized by Michael Eavis. The function was held in his own farm. The 2014 event was held on the month of June. The 2015 event will be held between 24th and 25th of the month of June at the same place. By October 5th 2014, 120,000 tickets for 2015 event had been sold while many had also accessed the website of the event. This shows that the next event will attract more fans than this year’s. The cost of each standard ticket for the Glastonbury Music Festival of the year 2015 is £225. 120, 000 tickets were sold at that price. Many more people had tried to access the website where the tickets were sold. Cambridge Dictionary (2014) defines market clearance as price at which the supply meets the demand. It can also be termed as an equilibrium price where the clients are willing to purchase certain goods at the supply provided by the supplier. The price for these tickets is at the market clearance price. The supply is meeting the demand of the tickets hence the complete sale of the tickets. This is expressed by the graph below: According to the graph, the tickets price is at the market clearance price. This is because the price lies at the intersection between the demand and supply curves thus at equilibrium. This means that the quantity supplied by the company is bought by the customer at that price. All tickets are successfully bought at that price. The customer is not willing to pay higher than that at the same quantity while the supplier cannot supply more at that price. Hence, this is the optimum price for both the customer and the supplier. This becomes the clearing price for the tickets. In any activity that a person chooses to participate in, there are always some costs involved this would have been used elsewhere. This is termed as opportunity cost (Sloman et al. 2012, p. 10). The opportunity costs of going to the Glastonbury Festival are indicated below (Glastonbury Festival, 2014): The cost of a ticket is £220 The cost of booking for the ticket is £ 5 Train fare Minimum is £20 and Maximum £105. Total costs: £225 + Train fare The opportunity costs for the festival are £225 without the train fare. The booking for the ticket is included as an opportunity cost of the event though it is not part of the ticket. This is because to get the ticket, you have to pay the booking fee first. This is why the booking fee is included in the opportunity costs. Further, the tickets are issued when boarding the train. You have therefore to pay for the train fare so that even after booking and paying for the ticket, you can get the ticket. Hence, the train fare is included in the opportunity costs as part of the costs involved. There are various variations of train fare depending on the place where you pick the train. Further, the train tickets can be single way or return tickets thus having variable costs for those journeys. These costs are therefore essential in the calculations although they are not part of the ticket fee. The selling of the tickets is carried out before the guests of the festival are announced. This is to keep the clients and fans for the festival anticipated and thus attain maximum number of customers for the function. However, if the announcements were made before selling the tickets, this would have affected the demand curve and make shifts of the demand curve (Besanko & Braeutigam, 2013, p. 38-42). These shifts depend on the participants of the effect. If the participants are favored my more fans, then more people will buy the tickets more. This will increase the demand. This will shift the demand curve upwards. The curve S represents the supply curve. The curve is kept constant i.e. there are no shifts on the supply curve. This is to help in analyzing the shifts on the demand curve on probable changes. D1 represents the demand curve before the participants are announced. D2 represents the demand after the participants are announced. The graph illustrates that once, the participants are announced and those participants are favored by majority of the fans, then the demand for the festival tickets will increase. This will cause the organizers to print more tickets so that the supply may meet the demand. This shifts the equilibrium upwards to a new level (Krugman & Wells, 2013, p. 72). However, if the announcement of the participants of the festival puts off many fans, there will be a shift in demand of the tickets. Many fans will not buy the tickets thus lowering the demand curve. This causes the demand curve to shift downwards and lowering the market equilibrium. As a result, the supply for the tickets will be more than the demand leading to over production of the tickets. This analogy is represented by the graph below: The curve S represents the supply for the tickets. As in the previous graph, it has been kept constant to help in analyzing the shifts on demand curve. D1 represents the demand curve before announcements are made while D2 represents demand after the announcement is made. According to the graph, after the announcement of the participants is made, few fans will be attracted to the event. This will lead to lesser demand for the tickets leading to a lower purchase. This shifts the demand curve downwards lowering the equilibrium price. More tickets will be in excess as a result of low demand leading to surplus in the market. This problem is therefore avoided by withholding announcements till the purchases have been made. This is a way of managing any setbacks that may arise from participants no liked by the fans. The company can use another mechanism to sell tickets. They can use ballot mechanism to do this. In this process, applicants apply for the tickets. Each applicant applies for a given number of tickets. The company sets a specific number of tickets to each individual or family. After the application, the company uses a certain criteria to determine the successful applicants. These applicants are then contacted and emailed their tickets. This system has a number of costs involved. First, there is need for a new system to detect valid and invalid tickets. The system also should be able to identify people of the same family and those not of the same family. It should further be able to identify double application and thus cancel one or all. Therefore the technique of ticket sales will involve extra inputs. However, the system has a good payoff. It ensures that the applicants feel that there were equal opportunities given to them for the event. Further, it ensures that all intended number of fans has been attained hence maximum profit. Therefore, this mechanism is good and more effective than the one in place currently. For buying the ticket, one has to register with the website. This has restricted resale of tickets by individual. This policy has led to alleviation of selling fake tickets and unauthorized sale of tickets. It has helped boost the trust and income of the company in the market. The policy will lead to deadweight loss. There are several factors that can cause this problem. These factors are pricing and taxes (Glaeser & Luttmer, 2003). The tax imposed on goods shifts the supply curve upwards. This is because suppliers will increase the cost of goods to cater for the new tax. Consumers thus buy lesser products as a result. When a single company is operating, it alters price as it wishes. For the festival, tickets are sold by See Tickets only. Thus if they increase the price that means the deadweight loss will increase. This deadweight concept is shown in the diagram below: To conclude, See Tickets is the authorized seller of the festival tickets. Therefore any results of other sellers obtained from the search engine should be ignored. This is because such sellers are not authorized. Once you purchase such tickets, you cannot use them hence a waste of money. Therefore a customer should be careful when using Viagogo to find ticket sellers. This is because Glastonbury does not bear any liability for such transactions. References Besanko, D. & Braeutigam, R. R. (2013.) Microeconomics, 4th edn. New Jersey: John Wiley & Sons. Retrieved 22 December 2014 from http://econ.tu.ac.th/class/archan/supawat/EE311/2.%20%5BDavid_Besanko,_Ronald_Braeutigam,_Ronald_R._Braeu.pdf Cambridge Dictionary Online. (2014). Market Clearing Price. Retrieved 22 December 2014 from http://dictionary.cambridge.org/us/dictionary/business-english/market-clearing-price Glaeser, E. and Luttmer, E. (2003). “The Misallocation of Housing Under Rent Control”. American Economic Review. Vol. 93, No. 4, pp.1027-1030. Retrieved 22 December 2014 from http://users.nber.org/~luttmer/rentcontrol.pdf Glastonbury Festival. (2014). 2015 Ticket Info. Glastonbury Festival. Retrieved 22 December 2014 from http://www.glastonburyfestivals.co.uk/information/tickets/ticket-info/ Krugman, P. & Wells, R. (2013). Microeconomics, 3rd edn. New York: Worth Publishers. Retrieved 22 December 2014 from http://finedrafts.com/files/CUNY/economics/Krugman%20Economics%203rd%20c2013%20txtbk.pdf Sloman, J., Wride, A. & Garratt, D. (2009). Economics, 7th edn. Harlow, England: Pearson. Retrieved 22 December 2014 from http://www.niseconomics.com/uploads/1/3/6/8/13688995/economics_by_sloman_welearnfree_-_7th_ed..pdf Read More