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> Not entirely true, and also not accepting that one person's "scalper" is another person's "bought this but decided I would rather have the money it seems to b

> Not entirely true, and also not accepting that one person's "scalper" is another person's "bought this but decided I would rather have the money it seems to be worth now that I see how much this is". That’s a bit of a straw man, literally no one considers that scalping. It’s generally understood to mean buying more of scarce product than you could ever possibly need with the intent to sell it at a massive markup. Scalpers are parasitic rent seekers in the digital age. They do nothing to improve the logistics or liquidity of markets. They merely seek to monopolise supply to extract profit from consumers for a product they did not produce.

kbenson 5y ago
> That’s a bit of a straw man, literally no one considers that scalping. It’s generally understood to mean buying more of scarce product than you could ever possibly need with the intent to sell it at a massive markup. That is by no means the accepted definition, nor an apt description. I know people that bought two PS3's when they came out in 2006, one to play, one to sell. That is generally accepted as "scalping", but they were not buying more than they could ever possibly need. Many, many people that participate in the resale market are people acting like this. They buy tickets for themselves and some extra ones while they're at it because they were lucky enough to by available at the right time and/or get lucky. Sometimes they also do it for the occassional event or good they don't plan to use. These are "scalpers" in every single single sense of the word, and the only difference between them and someone that makes a business out of it is scale. > Scalpers are parasitic rent seekers in the digital age. They do nothing to improve the logistics or liquidity of markets. They merely seek to monopolise supply to extract profit from consumers for a product they did not produce. Scalpers are just brokers that work in a different product. They make money by arbitrage, where the primary sales market is underselling a good compared to the secondary sales market. Additionally, they provide accurate market pricing because people responsible in the primary market don't want to for whatever reason (common ones includes upsetting ones fans, it being more work, harder to work out contract payments, etc). And lest you think it's easy to just point at scalpers/brokers and at all the money they make because they're selling a $50 ticket for $200, consider that those are the extreme cases, and relatively few tickets go for that. There's also many tickets that go under cost. In the same event. By significant amounts. It's not uncommon to get tickets for 20% cheaper on stubhub. In some cases, when brokers have bought tickets and the event didn't sell out, you can find tickets for single digit dollars that went for $40+ originally. I've talked about this before here.[1] In that example, I pointed to the market conditions for a specific event at that exact moment, where the primary market (TicketMaster) wasn't sold out and charging $39.50, TicketMaster's own secondary market was charging $36.50 for the same tickets, and Stubhub was charging $27. Who reaps the benefit of getting tickets for more than a 25% discount? Who do you think ended up paying for that? Where do you think the funds came from to pay for that? (here's a hint, you need to make an occasional 200%-300% profit in that business to break even over the long run in a lot of cases) Here's another question, why and how is this different than the stock market, and in the ways it's different, how does it matter to the perspective you're expressing? 1: https://news.ycombinator.com/item?id=18027560 https://news.ycombinator.com/item?id=18027560
- scoopertrooper 5y ago
  > These are "scalpers" in every single single sense of the word, and the only difference between them and someone that makes a business out of it is scale. You're right they are scalpers; they are buying more than needed with the hope of making a quick buck. However, like most things it's a matter of degree. Your friends were acting in the wrong and in the aggregate they did harm the market, but the people doing it professionally cause the most harm individually and hence tend to raise the most ire. > Scalpers are just brokers that work in a different product. They make money by arbitrage, where the primary sales market is underselling a good compared to the secondary sales market. They create scarcity in the primary market, which forces people into the secondary market. If scalpers did not exist, then the same number of people would get tickets, but there would be a greater welfare gain for consumers. > And lest you think it's easy to just point at scalpers/brokers and at all the money they make because they're selling a $50 ticket for $200, consider that those are the extreme cases, and relatively few tickets go for that. There's also many tickets that go under cost. They may be taking some risk in their venture, but they're still not providing any value. They are needless middlemen in a market that already sells direct to consumers. Also the cases are not that 'extreme', ask anyone trying to buy a graphics card right now, gasoline a week ago, or toilet paper when Covid-19 was starting up. > Who do you think ended up paying for that? Where do you think the funds came from to pay for that? (here's a hint, you need to make an occasional 200%-300% profit in that business to break even over the long run in a lot of cases) Presumably they are claiming a bigger share of the welfare pie than they are giving, else they wouldn't be participating in the market. > Here's another question, why and how is this different than the stock market, and in the ways it's different, how does it matter to the perspective you're expressing? The stock market has a social purpose. It provides a means for companies to raise capital to undertake investment. The market system is theorised to be the most efficient means to allocate this capital. The scalpers don't serve a social purpose, they merely extract welfare from transactions that would have otherwise favoured consumers.
  - kbenson 5y ago
    > Your friends were acting in the wrong and in the aggregate they did harm the market Please explain this harm to the market. I don't see how the market was harmed in any way. > They create scarcity in the primary market, which forces people into the secondary market. There exists scarcity in the primary market, because otherwise there would be no benefit to buying the tickets. That's a fundamental misunderstanding you have. Resellers do not generally create demand, they capitalize on existing or future demand. > the same number of people would get tickets, but there would be a greater welfare gain for consumers. Define "welfare gain". I contend there is also welfare gain for consumers with a secondary market, but not necessarily the same consumers. The primary market prioritized people that are available at certain times and have money available at the initial sale time. The secondary market prioritizes people that may not have been available at the initial sale time at the cost of a more variable cost. You can contend that your group of consumer is better or more worth than the group I've defined, but if that's your goal, please do so. Otherwise, a secondary market provides access for at least the same number of people, and sometimes more, as it's possible (and likely) that while some tickets might go at a premium, some others might go at a discount because of poorly executed strategies by brokers. > They may be taking some risk in their venture, but they're still not providing any value. They are. That are providing access. Without a secondary market, after the last primary market ticket was sold, it would be impossible to buy tickets to that event. Even if you allowed a secondary market but somehow restricted it to only those that intended to go but could not, you would shut out all those that wanted to go but could not be available to buy tickets during the period it was initially on sale on the primary market. For some events that's as short as a few seconds (and yes, even without brokers). > They are needless middlemen in a market that already sells direct to consumers. So is Amazon. So is your local Supermarket. So is any fresh fruit or produce market for that matter. I mean you can just drive to the farm, right? I hope you only like your produce and fruit in season, because people that warehouse it to sell at times when the market isn't flush with that product are just needless middlemen in a market that sells direct, right? > Presumably they are claiming a bigger share of the welfare pie than they are giving, else they wouldn't be participating in the market. If all you prioritize is cost, then you're not serving people very well. The very nature of a market is that the many diverse needs of the buyers will be served by different sellers that offer slightly different incentives for different costs. If we only prioritized for cost in food, we'd all be eating rice and beans every night and that's all that would be grown. Instead people prioritize taste, and nutrition, and health, and we have an actual market. If we only prioritized for cost in vehicles, we'd all be driving either a bicycle or a stripped down motorcycle, because who cares about comfort or safety? > The market system is theorised to be the most efficient means to allocate this capital. The market system is theorized to be the most efficient means to alloow buyers with diverse needs find a seller that can provide those needs. Sometimes that's cost, sometimes it's something else. > The scalpers don't serve a social purpose I've outlined some already above. To repeat, they provide liquidity, meaning there is availability of tickets at a cost people are willing to pay more often than without them. They provide the ability to find the true value of a ticket at any time, rather than the fiat price that was offered initially. This can mean that tickets are available for cheaper than originally offered for (see my real life example noted earlier).

kbenson 5y ago

> That’s a bit of a straw man, literally no one considers that scalping. It’s generally understood to mean buying more of scarce product than you could ever possibly need with the intent to sell it at a massive markup. That is by no means the accepted definition, nor an apt description. I know people that bought two PS3's when they came out in 2006, one to play, one to sell. That is generally accepted as "scalping", but they were not buying more than they could ever possibly need. Many, many people that participate in the resale market are people acting like this. They buy tickets for themselves and some extra ones while they're at it because they were lucky enough to by available at the right time and/or get lucky. Sometimes they also do it for the occassional event or good they don't plan to use. These are "scalpers" in every single single sense of the word, and the only difference between them and someone that makes a business out of it is scale. > Scalpers are parasitic rent seekers in the digital age. They do nothing to improve the logistics or liquidity of markets. They merely seek to monopolise supply to extract profit from consumers for a product they did not produce. Scalpers are just brokers that work in a different product. They make money by arbitrage, where the primary sales market is underselling a good compared to the secondary sales market. Additionally, they provide accurate market pricing because people responsible in the primary market don't want to for whatever reason (common ones includes upsetting ones fans, it being more work, harder to work out contract payments, etc). And lest you think it's easy to just point at scalpers/brokers and at all the money they make because they're selling a $50 ticket for $200, consider that those are the extreme cases, and relatively few tickets go for that. There's also many tickets that go under cost. In the same event. By significant amounts. It's not uncommon to get tickets for 20% cheaper on stubhub. In some cases, when brokers have bought tickets and the event didn't sell out, you can find tickets for single digit dollars that went for $40+ originally. I've talked about this before here.[1] In that example, I pointed to the market conditions for a specific event at that exact moment, where the primary market (TicketMaster) wasn't sold out and charging $39.50, TicketMaster's own secondary market was charging $36.50 for the same tickets, and Stubhub was charging $27. Who reaps the benefit of getting tickets for more than a 25% discount? Who do you think ended up paying for that? Where do you think the funds came from to pay for that? (here's a hint, you need to make an occasional 200%-300% profit in that business to break even over the long run in a lot of cases) Here's another question, why and how is this different than the stock market, and in the ways it's different, how does it matter to the perspective you're expressing? 1: https://news.ycombinator.com/item?id=18027560 https://news.ycombinator.com/item?id=18027560

scoopertrooper 5y ago
> These are "scalpers" in every single single sense of the word, and the only difference between them and someone that makes a business out of it is scale. You're right they are scalpers; they are buying more than needed with the hope of making a quick buck. However, like most things it's a matter of degree. Your friends were acting in the wrong and in the aggregate they did harm the market, but the people doing it professionally cause the most harm individually and hence tend to raise the most ire. > Scalpers are just brokers that work in a different product. They make money by arbitrage, where the primary sales market is underselling a good compared to the secondary sales market. They create scarcity in the primary market, which forces people into the secondary market. If scalpers did not exist, then the same number of people would get tickets, but there would be a greater welfare gain for consumers. > And lest you think it's easy to just point at scalpers/brokers and at all the money they make because they're selling a $50 ticket for $200, consider that those are the extreme cases, and relatively few tickets go for that. There's also many tickets that go under cost. They may be taking some risk in their venture, but they're still not providing any value. They are needless middlemen in a market that already sells direct to consumers. Also the cases are not that 'extreme', ask anyone trying to buy a graphics card right now, gasoline a week ago, or toilet paper when Covid-19 was starting up. > Who do you think ended up paying for that? Where do you think the funds came from to pay for that? (here's a hint, you need to make an occasional 200%-300% profit in that business to break even over the long run in a lot of cases) Presumably they are claiming a bigger share of the welfare pie than they are giving, else they wouldn't be participating in the market. > Here's another question, why and how is this different than the stock market, and in the ways it's different, how does it matter to the perspective you're expressing? The stock market has a social purpose. It provides a means for companies to raise capital to undertake investment. The market system is theorised to be the most efficient means to allocate this capital. The scalpers don't serve a social purpose, they merely extract welfare from transactions that would have otherwise favoured consumers.
- kbenson 5y ago
  > Your friends were acting in the wrong and in the aggregate they did harm the market Please explain this harm to the market. I don't see how the market was harmed in any way. > They create scarcity in the primary market, which forces people into the secondary market. There exists scarcity in the primary market, because otherwise there would be no benefit to buying the tickets. That's a fundamental misunderstanding you have. Resellers do not generally create demand, they capitalize on existing or future demand. > the same number of people would get tickets, but there would be a greater welfare gain for consumers. Define "welfare gain". I contend there is also welfare gain for consumers with a secondary market, but not necessarily the same consumers. The primary market prioritized people that are available at certain times and have money available at the initial sale time. The secondary market prioritizes people that may not have been available at the initial sale time at the cost of a more variable cost. You can contend that your group of consumer is better or more worth than the group I've defined, but if that's your goal, please do so. Otherwise, a secondary market provides access for at least the same number of people, and sometimes more, as it's possible (and likely) that while some tickets might go at a premium, some others might go at a discount because of poorly executed strategies by brokers. > They may be taking some risk in their venture, but they're still not providing any value. They are. That are providing access. Without a secondary market, after the last primary market ticket was sold, it would be impossible to buy tickets to that event. Even if you allowed a secondary market but somehow restricted it to only those that intended to go but could not, you would shut out all those that wanted to go but could not be available to buy tickets during the period it was initially on sale on the primary market. For some events that's as short as a few seconds (and yes, even without brokers). > They are needless middlemen in a market that already sells direct to consumers. So is Amazon. So is your local Supermarket. So is any fresh fruit or produce market for that matter. I mean you can just drive to the farm, right? I hope you only like your produce and fruit in season, because people that warehouse it to sell at times when the market isn't flush with that product are just needless middlemen in a market that sells direct, right? > Presumably they are claiming a bigger share of the welfare pie than they are giving, else they wouldn't be participating in the market. If all you prioritize is cost, then you're not serving people very well. The very nature of a market is that the many diverse needs of the buyers will be served by different sellers that offer slightly different incentives for different costs. If we only prioritized for cost in food, we'd all be eating rice and beans every night and that's all that would be grown. Instead people prioritize taste, and nutrition, and health, and we have an actual market. If we only prioritized for cost in vehicles, we'd all be driving either a bicycle or a stripped down motorcycle, because who cares about comfort or safety? > The market system is theorised to be the most efficient means to allocate this capital. The market system is theorized to be the most efficient means to alloow buyers with diverse needs find a seller that can provide those needs. Sometimes that's cost, sometimes it's something else. > The scalpers don't serve a social purpose I've outlined some already above. To repeat, they provide liquidity, meaning there is availability of tickets at a cost people are willing to pay more often than without them. They provide the ability to find the true value of a ticket at any time, rather than the fiat price that was offered initially. This can mean that tickets are available for cheaper than originally offered for (see my real life example noted earlier).