Seniority Seating at the Royal Opera House

This paper examines lotteries and seniority queues as forms of commodity bundling price discrimination. There are good and bad seats, and two types of potential purchasers. Offered the choice of a high-priced good seat and a moderately-priced bundle of good and bad seats, customers self-select into high and low valuation types. For single-period purchases, the bundle is a lottery over good and bad seats. For repeated purchases, monopolists such as the Royal Opera House can do better by setting up a seniority allocation system.