In casino marketing practice, sometimes it is not easy to distinguish which measure should
be regarded as lowering price and which measure should be regarded as increasing cost. For
example, when a casino provides comps to its customers, is it a pricing measure or a costing
measure? Of course it is not important for casino managers or accountants to clarify such
conceptual differences. However, it is very important for economists because the theoretical
instruments that economists can handily use are almost all derived from other ordinary industries
where price is something that is related to consumers’ demand and cost is something that is
related to an enterprise’s profitability. Therefore, in order to be able to clearly draw a marginal
revenue curve and a marginal cost curve for the casino industry so as to clearly know where
the equilibrium is, we have to make a clear definition: all marketing measures a casino adopts
are increasing its cost except for those directly lowering down its house advantage. Just by
this definition, the marginal revenue curve of the VIP sector in this model exhibits a flat line
in parallel with the X axis, which implies, within the VIP-room contractual system, that the
casino never uses house advantage as a marketing tool. Instead, all the marketing measures it
takes are not actually marketing the customers, but marketing the customer recruiters, so it is
only related to cost.
In terms of marginal cost curve, there are also some meaningful figural differences between
the two casino sectors. The marginal cost curve of the walk-in sector shows a “U-turn” figure.
This can be explained by this fact: Macao is not an ideal tourist destination. The number of
walk-in customers is basically an ...