Supply/demand analysis suggests fans call the shots

Ram Tamara, director of Nathan India and go-to source for understanding the evolution of India’s cricket leagues brings an economist’s perspective to the debate about packed playing calendars and which type of game format will survive.

Writing in the February 11, 2011, issue of Mint,an Indian publication and partner of the Wall Street Journal,Tamara examines what having three separate formats for cricket portends for suppliers and fans alike. Those formats are test matches, one-day internationals, and Twenty20. He asserts that whether the International Cricket Council and national cricket boards are purely ”profit maximizers” or not they must gauge demand in deciding how many games to supply.

Tamara says that the “accurate measure of demand is the sum of all those who follow a match in the stadium, on television, on the Internet, in the print media, or on their mobile phones.” Newspaper coverage, advertiser attention, and highlight specials are all proxies for demand. Demand for the game as a form of entertainment and in particular formats can be influenced by “opportunity costs” and “substitution effects.” Factors here include economic growth and consequent rise in income and number of entertainment options, strength of fan preference, and fans? allotment of time for watching games live or in other media.

Suppliers who do not track the behavior of fans risk losing market share to those who observe fans and innovate to meet demand.

Read “Crowded field raises demand and supply questions” from Mint
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