Pricing Methods for a Municipal Government Event Center

Individual Economic Summary: Pricing Methods for a Municipal Government Event Center

Daniel J. Stone

Ohio Dominican University

Pricing Presentation from Daniel J. Stone

In July 2007, I returned to my home state of South Carolina after being away for 15 years with the last three being in the Tokyo, Japan area as an English Teacher on the prestigious Japan Exchange and Teaching Program. With an undergraduate degree in Parks, Recreation, and Tourism Management, I eventually found work at the City of Greer in one of their newly created positions, Events Supervisor. On the mainstream level, the City of Greer was used as one of the props for the George Clooney movie, "Leatherheads" and since 1992, just outside of the City of Greer, German automaker, BMW has been manufacturing vehicles. Greer had just broke ground on a multi-million dollar construction project, Greer City Hall. This project included a multi-room events center, amphitheater, and gazebo (City of Greer, 2013).

My first assignment was to conduct market research to find out the fair market value for renting out the new spaces that were set to go online in the Fall of 2008. After meeting several times with the City Manager throughout the winter and spring of 2008, my findings were presented to the Greer City Council at the annual fee schedule meeting in the Summer of 2008. (Appendix A). In retrospect, the City of Greer's new event center and park operated in a monopolistic competition environment. When local hotels and churches are included, there is a large number of event hall operators acting independently, market entry and exit was not difficult, services were differentiated by location, capacity of event hall and the ability to have an event hall expanded to two or three rooms and be able to use a kitchenette, for example. While customers chose among products, nonprice competition was essential as well. For example, a City of Greer resident received a discount.

Since a monopolistic competition environment has the characteristic of earning above normal profits which invites new entrants to the market, it appears that one other event hall began operations after the City of Greer's event center went online in October 2008. Furthermore, since new entrants will cause the City of Greer's demand curve to shift down and to the left and the Greater Greer supply curve to shift out and to the right, it is interesting to note that the prices that I presented in 2008 are the same in 2013 (Appendix B).

Considering that the position that I founded was eliminated among a few other newly created positions by the City of Greer due to the economic downturn known as The Great Recession of 2008, the supply and demand has not caused the prices to change. An existing competitor is still operating with business as usual. Barometric price leadership would suggest that one firm changes their price in response to economic conditions. But, five years and one of the most severe economic conditions since the Depression and the prices have stayed the same.

In conclusion, pricing of an event center managed by a government entity in a small town in the rural and small state of South Carolina comprises of the elements of a monopolistic competitor environment. Typically, the prices for goods and services will change depending on supply or demand. I suspect that due to the cumbersome nature of changing prices due to the annual fee schedule meeting coupled by the fact that the City of Greer benefits when other businesses such as their competitors are successful due to sales tax collections that the prices were set where they were desired by the Greater Greer area in 2008 and today. At the same time, if the City of Greer's event center does not remain profitable due to prices being too high, they can offset the loss with sales tax collections from the businesses in the municipality such as their competitors. Nevertheless, the City of Greer is serving its purpose as defined by Thomas Jefferson by enabling their residents a safe place to carry out an event. However, government entities are not businesses that are concerned with their bottom line and fall short in the implementation of money making activities. At present, the City of Greer's Recreation Department and Greenville Country Recreation District are at odds over the use of facilities and taxes to support those facilities (Greenville Online.com, 2013).

References

City of Greer. (2013). Events Center at Greer City Hall. Retrieved from City of Greer official website: http://www.cityofgreer.org/visit/events_center.php

Greenville Online.com. (2013). County-rec district merger expected to raises Greer taxes. Retrieved from website: http://www.greenvilleonline.com/article/20130620/YOURUPSTATE01/ 306200056/County-rec-district-merger-expected-raises-Greer-taxes

Keat, Paul G. and Philip L.Y. Young, Managerial Economics: Economic Tools for Today’s Decision Makers, 6th Ed. New York: Prentice Hall, 2009.

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(C) 2009-13