Scalping justified

Warren Meyer looks at the fine print:

[The] view of scalpers as leeching middlemen with no economic value but rather as rent-seekers who merely mark up tickets and pocket the money is unfortunately common. But they are in fact a perfectly normal functioning of markets. They perform at least two economic functions:

  1. Events often are mispriced for a variety of reasons. Sometimes they charge too much, as in the recent McGregor-Mayweather fight, and the arena is half-empty. The market can’t do much to fix this. But sometimes events are under-priced, and the demand far exceeds the available supply of tickets. When this happens, some method of rationing must occur. Back in my day rationing was by who was lucky enough to dial in at the exact right moment or who was willing to camp out all night. Resale markets, including scalpers, where tickets are resold well above face value are another approach. Scalpers don’t make money taking some sort of middleman fee, they make money buying tickets at face and then taking the risk that they can resell them later at a higher price. They are not always successful. I have sold a number of tickets I could no longer use under face to get rid of them, taking a loss.
  2. If you cannot resell a ticket to the person you want for the price you like, you lose some of your property rights in that ticket and it is less valuable to you. Look at airline tickets, which are all electronic today and cannot be resold or transferred. Are you better off as a consumer not having a secondary market for airline tickets? Do you really like tickets that are use-them-or-lose-them propositions? The contention in this article that consumers are better off if their concert tickets worked more like airline tickets is simply nonsense. Scalpers increase our consumer sovereignty.

Los Angeles Dodgers games on the radio have scads of sponsors, one of which is Barry’s Tickets, who, according to their radio spot, sell Dodgers tickets at no more than — sometimes less than — face value, with no hidden fees. (“NO WAY!” says the announcer.) The idea, of course, is to suggest, ever so subtly, that all those other sources are overcharging.

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