Skip to main content



The Effect of Ticket Scalping on the Market: Avicii Concert

As many of you know, Avicii, a renowned DJ, came to Cornell this past weekend for the homecoming concert. Tickets were in high demand; they sold out within the first 20 minutes of sales opening, and many student fans were not able to obtain tickets at all. A large part of the reason for the sudden shortage of tickets was due to “ticket scalpers”, who bought extra tickets with the intention of selling them at a higher price and making a profit from them.

As the article states, ticket scalping has become a profitable and popular business recently. While beneficial for the economy, it becomes unfair for concert go-ers. As explained, there are a few requirements in order for ticket scalping to occur. There must be a fixed supply of tickets, and the ticket list price must be lower than the market-clearing price. The new selling price of the tickets is freely adjusted depending on the demand and willingness others are willing to pay; it is ultimately these ticket scalpers who set the market clearing prices for the network.

For the Avicii concert, students purchased tickets for $30 and were able to sell them for up to $130, gaining a significant profit. The scenario of ticket scalping is closely related to the markets and strategic interaction in networks that we have discussed in the past few weeks. Scalpers determined market-clearing prices because they had control of the supply and had a large pool of people who were willing buy tickets at any price.

The reselling of tickets gives us insight into how an individual’s role in the network structure can result in different economic outcomes and allow us to observe the interaction between buyers and sellers. Many of the scalpers implemented the idea of a first-price sealed-bid auction in which people simultaneously submit the value that they are willing to pay, and the seller sells the ticket to the person with the highest price. This sheds light on the idea of having a value that you are willing to pay, and how the optimal strategy is to always submit this value so that you do not lose money.

We also have to take into account favoritism and social networks when discussing the topic of tickets sales. For example, if a friend bought an extra ticket, they are much more willing to sell it to you for a lower price than to a stranger with a higher bid. This is due to our connections and social networks; it displays the importance and advantages that come with having and developing connections. The topic of negotiation and supply and demand can be clearly seen here. Overall, it is interesting to see how this local event that affected many of us connects many of the topics that we have discussed thus far in class.

-elkay

Source: http://wichitaliberty.org/sedgwick-county-government/scalping-is-a-market-function-not-a-criminal-activity/

Comments

Leave a Reply

Blogging Calendar

September 2012
M T W T F S S
 12
3456789
10111213141516
17181920212223
24252627282930

Archives