Estimating Demand For Stage Production

This paper helps to illuminate the behavior patterns among the theatre’s attendants in the process of ticket’s purchase. Since the theatre attempts to balance between the high rate of occupancy and the box-office, the purpose of the study is to reveal the effects of changes in prices on attendance rate for different types of performances. This project is conducted conjointly with the Perm Tchaikovsky Opera and Ballet Theater. Data is taken from the sales information system of the theater for four seasons 2011-2012/2014-2015. The data is aggregated to the level of seating area and performance and consists of the occupancy rate, the set of prices and performance characteristics. The research explores the determinants of demand using censored quantile regression. The method employed is a powerful tool for estimation of effects on different levels of attendance rates. We have estimated the parameters of demand function and revealed that the demand is slightly elastic by price. The results obtained allow to provide recommendations on optimal pricing strategies for different areas. By our estimates, the recommendations based on the results of this study may increase the theater’s revenue by 22 percent.