The necessity of ticket scalpers
As a big fan of Chance the Rapper, I was among the many who cheered him on last month when he announced that he had bought back the tickets for his concert, Magnificent Coloring Day, from scalpers. He paid over three times their original value just so he could sell them again at the price he intended. Suffice to say, musicians and concert-goers alike hate ticket scalpers. However, many economists would say they shouldn’t.
Using an economics lens, specifically focused on the lessons we’ve had on market clearings and traders, it makes perfect sense that scalpers exist. Not even in a detrimental way. Scalpers are around for two main reasons:
- Many tickets are priced lower than how most fans value them
- The demand is much higher than the supply (venue seats/concerts held in an area vs the number of fans)
Often times, when an artist visits a city, they hold only a single show. If the artist is particularly famous, there will certainly be more fans willing to pay for a ticket than there are seats at the venue. In terms of market clearing, more buyers than sellers. Each of these fans will value the ticket differently, and from what we see with scalpers, often times large groups of them value them quite above selling price. The scalpers act as traders that buy the ticket at the price the artists are willing to sell and then sell it to the people willing to pay much more for it. This wouldn’t happen if the ticket prices were much closer to their market clearing prices. Instead, they are way below, leading to traders or the scalpers being part of the equation.
Scalpers shouldn’t be hated, and instead, musicians should control the prices AND the supply of their tickets (by increasing performances) if they are genuinely invested in stopping re-selling. Otherwise, they have no right to complain. On the other side of the coin, fans who go to scalpers get to skip long lines and buy the ticket at a time closer to the date. While it is annoying to go through a third party, it is still up to those fans to decide whether or not they value the ticket at the raised price. Moreover, fans wouldn’t even be in that situation if artists took balancing the supply and demand of their tickets more seriously.
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