The Pricing of a Round of Golf

Abstract

This article argues that the use of membership fees at shared facilities, such as private golf courses, is not per se evidence of inefficient pricing as implied by the club theory literature on variable usage. The author reconciles the inconsistency between the predictions of existing models and empirical evidence by accounting for members’ opportunity cost of time and the effect of congestion on members’ utility. In particular, this research shows that the simplified nature of congestion assumed in the literature ignores the positive externalities that members receive from a members-only club.