Ticket Scalping and Ticket Auctions
Ticket scalpers purchase tickets for an event and then sell those tickets to consumers for a higher price than they originally paid, pocketing the difference. Ticket scalping has been around for a long time, but with the onset of the internet and online ticket vendors such as StubHub and Ticketmaster, the practice of ticket scalping is occurring on a larger scale. Now, it’s possible to create bots that will purchase large quantities of tickets for an event as soon as they go on sale, faster than any actual human could purchase them. In the linked article, it is estimated that around 20% of all tickets sold for popular events end up being resold for a higher price. This can lead to consumers feeling discouraged by the whole affair and frustrated by their inability to purchase tickets unless they pay a huge markup to the scalpers.
The article claims that ticket scalping occurs because the tickets are originally sold for a price well below market value. This gives the scalpers an incentive to purchase as many tickets as they can, so they can sell them at a price closer to market value and make money from the difference. As we learned in class, auctions provide a way of selling something at its true market value, even when that value is hard to establish before-hand. The basic idea is to let the market decide what they’re willing to pay, and then have them pay that. By having vendors auction tickets instead of selling them at a listed price that is well below market value, it is possible that the scalping problem might be reduced or eliminated. Intuitively, this makes sense – scalpers make money from the difference between the original ticket price and market value, so by eliminating that difference, you eliminate the scalpers’ payoff.
Ticketmaster, an online ticket vendor, has implemented an online ticket auction service that allows venues to auction tickets instead of selling them at a listed price. It would be interesting to see how effective this is at preventing ticket scalping and reducing consumer frustration.
Link:
http://help.ticketmaster.com/what-are-ticketmaster-auctions/