Reading Assignment #13- Golf Digest Bethpage Gray (Market)

A.

The beautiful and desirable Bethpage Golf Course in NY.

I found this article to be extremely interesting and it was my favorite reading assignment piece of the semester so far (although I am a bit biased since I am a sports fan and this was an article on sports economics).

I'll point out three things in particular I found interesting in the article.

I found it amazing how Bethpage was so upset that people were making "side deals" to get in to the park. In fact, if Bethpage finds out that a customer used NYGolfShuttle.com (NYGS) to get on their course, the customer will be banned from the course for a year. In my opinion, this is ridiculous, and I explain why I feel this way below.

When the website NYGS makes their "side deals", they are still paying Bethpage the full price of admission. Thus, Bethpage is not losing any money.

In fact, we are all wealthier because of NYGS. NYGS has opened a market that would otherwise not be in existence.

Thus, economic growth is occurring in countless places- the golf course is getting paid as is NYGS and the customer is getting to go to the golf course he/she desires. Thus, we are all much wealthier because of NYGS, which makes me question why Bethpage would be upset.

If Bethpage wants more money, they should charge more. Otherwise, they are actually HELPING our economy by having their golf course at such a low price and causing there to be a huge demand. Now, more people get a good job because of NYGS. So, Bethpage, in my opinion, really has no right to be upset.

A second aspect I found interesting was how NYGS operates. Basically, they take care of ordering the ticket for the customer to get on the golf course. It is fascinating to me because NYGS is operating as a middleman.

I always thought of a middleman as a store selling groceries. I never thought of a scalper, or a website like NYGS, as a middleman, and that is just what NYGS is.

The website is bringing together buyer (the golfer) and seller (Bethpage). The website charges more money than Bethpage does because of the convenience NYGS is offering customers to get in to the golf course (the golfers don't have to wait hours on end outside to get on the course.) Thus, NYGS is reducing transaction costs for both parties as they are making it easier for buyer and seller to come together.

I also found it interesting how in this instance, since the price for admittance is so low, the price rationing system is not that successful since those who value it the most don't have the best chance to get in. But, NYGS makes it so the price rationing system is indeed successful, as those who are willing to pay a heftier monetary price to get in will get the good (a chance to play on Bethpage).


B.
1. If Bethpage State Park is getting its money, why does it care if people are "beating" the system? No one is stealing money from the course as it is receiving its full entry free from NYGS.
2. What would happen if Bethpage State Park raised their prices significantly? Would that have any effect on the business NYgolfshuttle.com? It might since quantity demanded would probably decrease, lines/demand to get in the park might decrease as well, and then the company could go out of business.
3. Does Bethpage even have a right to be upset? Is NYgolfshuttle.com doing anything wrong? Economically, it seems that the website is doing people a favor by rationing the tickets through the price system, so is Bethpage actually the wrong ones in this situation for being upset at what NYgolfshuttle.com is doing?


C.
This article talks about how the demand is very high to play golf at a US Open Golf Course, Bethpage (N.Y.) State Park and this very much affects the allocation of who gets to play on the course (known in the article as "tee-time allocation". The demand to play at Bethpage is arguably higher than any other golf course in the country. The factors that lead to this are:

1. The course is located right outside the most populated area in the country
2. The course had a recent $3 million renovation that made the courser nicer than it already was
3. The cost of admission is modestly priced in comparison to other professional golf courses. Prices are between $60-$120 depending on where you are from.

Bethpage presents golf fans the best chance to play at a US Open golf course at a cheap price, so there are few, if any, substitutes for the course. The effect of this is humongous lines for customers to get a chance to play on the course. The lines are so large that many people are turned away from playing on the course despite the fact that they have waited in line for hours on end- there are only so many hours in a day, and quite often, the golf course will close for the day or reach maximum occupancy while many people are still in line.

As we learned in class during a lecture, people are forced to wait in line to get in to the course. Thus, the rationing of who gets to go in has to do with who is willing to wait the longest in line. But people are wasting time waiting in line (they could be out producing or doing something more productive for society than waiting), so this is an ineffective way to ration.

Because of the difficult to get on the course, a business was born: NYGolfShuttle.com (NYGS). They take care of setting up reservations for people to get on the course and they charge a lot more money than does Bethpage. It costs $850 for one person or $450 per person for a foursome. Because of NYGS, there is now an effective rationing mechanism in place: the price system. Those who value playing on the course the most will pay the most and don't have to waste time waiting in line. 

Simply put, NYGS is a company that "scalps tee times". The way NYGS operates is by getting a customer to give his/her information (credit card, name, address, etc.) to them. NYGS then hires a ton of people to basically wait in line or call in for a reservation on behalf of the customer. Doing this greatly increases the chance for the customer to get a tee time.

This practice is by no means illegal, according to the article. And as I wrote about in Part A, it is actually very good for the economy (although Bethpage employees are against it). In short, this "side deal" helps everyone get what they want and makes us more wealthier because more money is spent, jobs are created, and the customer gets what he/she values without having to waste his/her time waiting in line.