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I don’t really understand the outrage over scalpers. Isn’t this just normal market behavior? Is a retailer that buys things and sells them with a markup a scalp

I don’t really understand the outrage over scalpers. Isn’t this just normal market behavior? Is a retailer that buys things and sells them with a markup a scalper? People seem to be willing to pay crazy prices for events.

andrew_lettuce 3mo ago
The outrage is over the apparent collusion between a platform that argues it only facilitates a fan-to-fan marketplace, and a hedge fund run by the platform's CEO that sells a massive volume of resale tickets. This is definitely not on the spirit of competition regardless of it's illegal or not
fecal_henge 3mo ago
The ultimate customers would certainly pay more than the face price which is what the scalpers pay, yet the scalpers get all the tickets. This is abnormal market behaviour.
- brookst 3mo ago
  What’s normal? An auction would be the obvious solution, and I guess you could argue it effectively is an auction, just with initial sales that pretend to be a race and are actually sold to speculators who then run the auction.
Brendinooo 3mo ago
>Is a retailer that buys things and sells them with a markup a scalper? If you bought all of the food then offered the food at 10x the prices, we'd be outraged with you, yes. Stakes are lower because it's a luxury good, not food, but it's the same idea.
- bawolff 3mo ago
  There is a reason this doesn't work in general though. If you bought up all the food, farmers would raise prices until either you couldn't afford to do that anymore or eventually there is a splurge of new farmers taking advantage of all your free money until you run out of money. It could maybe work in times of famine where the government introduces price controls or rationing; it does not work in normal times. For black markets (which is essentially what scalping is) to work, there has to be some shortage of a good that is priced artificially low. It works with concerts because singers can only sing so much but they also don't want to make the concert so unaffordable that only millionaires can go. There are very few situations like that. In most industries you would just increase prices until supply equals demand.
  - pixl97 3mo ago
    Onion futures act. This is the reason that businesses don't try to monopolize the food industry. It's not competition as we just saw from the egg industry. The government gets pushed back from the masses pretty quickly on food related issues.
    - gruez 3mo ago
      >This is the reason that businesses don't try to monopolize the food industry. It's not competition as we just saw from the egg industry. The government gets pushed back from the masses pretty quickly on food related issues. But you provided your own counterexample with eggs?
      - pixl97 3mo ago
        Note they didn't monopolize it, so I guess that was correct. They did form a cartel that did cause a lot of political issues, and if we had a functioning government would have been a very risky bet.
    - bawolff 3mo ago
      Yes, although i would argue that a cartel suppressing supply is a different mechanism than what is happening with scalpers. The onion futures thing is kind of interesting, because it was essentially the opposite of a scalper - they didn't try and buy all the onions to make price go up, they did it to crash the price of onions so that their short positions would pay off. Still a fair counter example to the idea that the market would self correct by itself. People not trying to monopolize the food industry is a bit of an american centric view, e.g. Canada had a government mandated wheat monopsony for a long time. I think australia had something similar. I'm sure there are plenty of historical food monopolies. They of course couldn't be too greedy or its off with their head.
  - Brendinooo 3mo ago
    This makes sense, but I'd contend it's all the more reason for outrage: not only are scalpers doing what they're doing anyways, but they're destroying the (totally legitimate and sympathetic!) reason for "artificially" lowering the price to begin with. I should note that outrage doesn't seem to land on the people who buy from scalpers, which is...probably correct? Seems easier to say "don't break the contract" to scalpers instead of fans who are just able to pay more.
sdthjbvuiiijbb 3mo ago
Yes it's rational market behavior. But it bothers people for such a blatantly worthless middleman to capture all consumer surplus for themselves while providing zero value.
- pimlottc 3mo ago
  Which is to say, “perfectly efficient market” is not an end-goal in-and-of itself for most people
sushid 3mo ago
It's not a simple buy/sell marketplace. There's no recourse for fans who purchase a confirmed ticket, only to find that the seller "doesn't have them" and see the same ticket relisted for higher if the price jumps. Stubhub prioritize these scalper relationships and doesn't meaningfully protect its buyers from getting screwed over.
janalsncm 3mo ago
You are describing rent-seeking behavior: middle men who add no economic value yet inject themselves into transactions. Yes, this is “normal” in the sense that it is common. It is “normal” in the same way that cancer is “normal”. No, this is not “normal” in the sense of being behavior the government should just tolerate. It is in the same category of market failures as monopolies and externalities.
- brookst 3mo ago
  So is all demand-based pricing rent-seeking? Like selling gold or a house or any other scarce good for more than you paid?
  - Brendinooo 3mo ago
    I think that if you poke at the term "rent-seeking" with the definition of "middle men who add no economic value yet inject themselves into transactions", you'll just end up arguing about what "adding economic value" means. That said...if you can do that, you'll probably find that some additions of economic value are far more defensible than others, so it shouldn't all be flattened in the manner you're suggesting. I mean, scalpers add economic value, right?! They allow (wealthier) people who didn't stand in line at the right time to have a chance to purchase a ticket!
    - brookst 3mo ago
      Yeah. “Rent-seeking” is just a fancy rhetorical term for “people doing things I don’t like with money”. Subscriptions are rent-seeking. Loans are rent-seeking. Spending millions in capital to buy a building and renting apartments for thousands? Rent-seeking. Copyright and patents, for sure, unless an AI company is involved in which case copyright is noble and must last a thousand years, because AI companies are rent-seeking.
      - dwb 3mo ago
        No, too reductive. Rent-seeking is when people manipulate a situation to charge money without providing value themselves. Landlords are rent-seekers to the extent that they don’t do much, they mostly just own property - typical rent is many, many times the value of someone looking after the maintenance and building insurance for you (and anything else you want to argue a landlord does). The housing supply is naturally quite limited so the market doesn’t self-correct. And anyway, if enough people don’t like the things people are doing with money, we can stop them from happening! So a pretty odd gotcha, to me.
rtpg 3mo ago
If reselling is allowed a market is created, pushing up prices. But that extra money doesn't go towards anyone involved in the creation of the product! It goes towards scalpers. Though there's a bit of price discovery value.... Without reselling scalpers have no reason to scoop up the tickets. So if you prevent reselling... then concertgoers just have to do a lottery or something for the scarce resource and people who aren't interested in the concert have no reason to buy the tickets! Just a better experience for everyone except for the scalpers and I guess Taylor Swift cuz she won't know the price ceiling for tickets.
- CuriouslyC 3mo ago
  A lottery is the only fair option. Market pricing is exactly as fair as capitalism in general.
- AlotOfReading 3mo ago
  I suspect we'd see management companies trying out auctions and upgrade bidding not long after a resale prohibition passed. Or they'd reinvent the fare class system airlines use.

andrew_lettuce 3mo ago

The outrage is over the apparent collusion between a platform that argues it only facilitates a fan-to-fan marketplace, and a hedge fund run by the platform's CEO that sells a massive volume of resale tickets. This is definitely not on the spirit of competition regardless of it's illegal or not

fecal_henge 3mo ago

The ultimate customers would certainly pay more than the face price which is what the scalpers pay, yet the scalpers get all the tickets. This is abnormal market behaviour.

brookst 3mo ago
What’s normal? An auction would be the obvious solution, and I guess you could argue it effectively is an auction, just with initial sales that pretend to be a race and are actually sold to speculators who then run the auction.

Brendinooo 3mo ago

>Is a retailer that buys things and sells them with a markup a scalper? If you bought all of the food then offered the food at 10x the prices, we'd be outraged with you, yes. Stakes are lower because it's a luxury good, not food, but it's the same idea.

bawolff 3mo ago
There is a reason this doesn't work in general though. If you bought up all the food, farmers would raise prices until either you couldn't afford to do that anymore or eventually there is a splurge of new farmers taking advantage of all your free money until you run out of money. It could maybe work in times of famine where the government introduces price controls or rationing; it does not work in normal times. For black markets (which is essentially what scalping is) to work, there has to be some shortage of a good that is priced artificially low. It works with concerts because singers can only sing so much but they also don't want to make the concert so unaffordable that only millionaires can go. There are very few situations like that. In most industries you would just increase prices until supply equals demand.
- pixl97 3mo ago
  Onion futures act. This is the reason that businesses don't try to monopolize the food industry. It's not competition as we just saw from the egg industry. The government gets pushed back from the masses pretty quickly on food related issues.
  - gruez 3mo ago
    >This is the reason that businesses don't try to monopolize the food industry. It's not competition as we just saw from the egg industry. The government gets pushed back from the masses pretty quickly on food related issues. But you provided your own counterexample with eggs?
    - pixl97 3mo ago
      Note they didn't monopolize it, so I guess that was correct. They did form a cartel that did cause a lot of political issues, and if we had a functioning government would have been a very risky bet.
  - bawolff 3mo ago
    Yes, although i would argue that a cartel suppressing supply is a different mechanism than what is happening with scalpers. The onion futures thing is kind of interesting, because it was essentially the opposite of a scalper - they didn't try and buy all the onions to make price go up, they did it to crash the price of onions so that their short positions would pay off. Still a fair counter example to the idea that the market would self correct by itself. People not trying to monopolize the food industry is a bit of an american centric view, e.g. Canada had a government mandated wheat monopsony for a long time. I think australia had something similar. I'm sure there are plenty of historical food monopolies. They of course couldn't be too greedy or its off with their head.
- Brendinooo 3mo ago
  This makes sense, but I'd contend it's all the more reason for outrage: not only are scalpers doing what they're doing anyways, but they're destroying the (totally legitimate and sympathetic!) reason for "artificially" lowering the price to begin with. I should note that outrage doesn't seem to land on the people who buy from scalpers, which is...probably correct? Seems easier to say "don't break the contract" to scalpers instead of fans who are just able to pay more.

sdthjbvuiiijbb 3mo ago

Yes it's rational market behavior. But it bothers people for such a blatantly worthless middleman to capture all consumer surplus for themselves while providing zero value.

pimlottc 3mo ago
Which is to say, “perfectly efficient market” is not an end-goal in-and-of itself for most people

sushid 3mo ago

It's not a simple buy/sell marketplace. There's no recourse for fans who purchase a confirmed ticket, only to find that the seller "doesn't have them" and see the same ticket relisted for higher if the price jumps. Stubhub prioritize these scalper relationships and doesn't meaningfully protect its buyers from getting screwed over.

janalsncm 3mo ago

You are describing rent-seeking behavior: middle men who add no economic value yet inject themselves into transactions. Yes, this is “normal” in the sense that it is common. It is “normal” in the same way that cancer is “normal”. No, this is not “normal” in the sense of being behavior the government should just tolerate. It is in the same category of market failures as monopolies and externalities.

brookst 3mo ago
So is all demand-based pricing rent-seeking? Like selling gold or a house or any other scarce good for more than you paid?
- Brendinooo 3mo ago
  I think that if you poke at the term "rent-seeking" with the definition of "middle men who add no economic value yet inject themselves into transactions", you'll just end up arguing about what "adding economic value" means. That said...if you can do that, you'll probably find that some additions of economic value are far more defensible than others, so it shouldn't all be flattened in the manner you're suggesting. I mean, scalpers add economic value, right?! They allow (wealthier) people who didn't stand in line at the right time to have a chance to purchase a ticket!
  - brookst 3mo ago
    Yeah. “Rent-seeking” is just a fancy rhetorical term for “people doing things I don’t like with money”. Subscriptions are rent-seeking. Loans are rent-seeking. Spending millions in capital to buy a building and renting apartments for thousands? Rent-seeking. Copyright and patents, for sure, unless an AI company is involved in which case copyright is noble and must last a thousand years, because AI companies are rent-seeking.
    - dwb 3mo ago
      No, too reductive. Rent-seeking is when people manipulate a situation to charge money without providing value themselves. Landlords are rent-seekers to the extent that they don’t do much, they mostly just own property - typical rent is many, many times the value of someone looking after the maintenance and building insurance for you (and anything else you want to argue a landlord does). The housing supply is naturally quite limited so the market doesn’t self-correct. And anyway, if enough people don’t like the things people are doing with money, we can stop them from happening! So a pretty odd gotcha, to me.

rtpg 3mo ago

If reselling is allowed a market is created, pushing up prices. But that extra money doesn't go towards anyone involved in the creation of the product! It goes towards scalpers. Though there's a bit of price discovery value.... Without reselling scalpers have no reason to scoop up the tickets. So if you prevent reselling... then concertgoers just have to do a lottery or something for the scarce resource and people who aren't interested in the concert have no reason to buy the tickets! Just a better experience for everyone except for the scalpers and I guess Taylor Swift cuz she won't know the price ceiling for tickets.

CuriouslyC 3mo ago
A lottery is the only fair option. Market pricing is exactly as fair as capitalism in general.
AlotOfReading 3mo ago
I suspect we'd see management companies trying out auctions and upgrade bidding not long after a resale prohibition passed. Or they'd reinvent the fare class system airlines use.