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Because then the very wealthy scalper has a monopoly, and the monopoly power allows for profit-maximizing pricing, which causes dead-weight loss. It's better t
by leelin 17y ago
Because then the very wealthy scalper has a monopoly, and the monopoly power allows for profit-maximizing pricing, which causes dead-weight loss.
It's better the scalper sell 50% of the tickets at 10x (and let 50% rot) than all of the tickets at 2x (and have nothing rot).
The scalper will let some tickets rot to preserve the 10x pricing because this is a repeated game. If people know that he'd rather let tickets rot than lower prices at the last moment, they'll have no choice but to buy at 10x or miss the game.
- imgabe 17y agoBut there's already a natural monopoly on tickets isn't there? You can only buy them from the venue that the show is taking place at. Surely if they see that the market will bear 10x the price they're asking, they'll just raise the face value price on the ticket. This would make it unprofitable for the scalper to buy them all and resell them, since he could no longer ask 10x the price.