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Scalpers often have the time, money and incentive to build automated systems which hammer ticket services to buy up tickets which otherwise would have been sold

Scalpers often have the time, money and incentive to build automated systems which hammer ticket services to buy up tickets which otherwise would have been sold directly to people attending an event. Whenever you hear about a concert or sporting event selling out within a ridiculously short period of time (sometimes 30 seconds after online sales open), it's because of this, and represents the creation of inefficiency rather than the remedying of it. Also, first-party ticket vendors have been known to actively partner with third-party resellers to essentially eliminate the original market. Ticketmaster, for example, owns an online scalping service (TicketsNow) and there have been repeated allegations that they give preferential treatment to their own scalping subsidiary.

cturner 17y ago
represents the creation of inefficiency rather than the remedying of it. I can't think of a situation where scalpers are not contributing to efficiency. I think you've focussed on intentions of particular parties in the scenarios rather than the net market and that this has taken you to an incorrect conclusion. With scalpers, the venue venue has their risk removed (they lock in their sales early), and the scalpers increase liquidity by removing the venue's monopoly power over pricing the event. And price discover is better. Now either the consumers are able to buy the tickets from the scalpers in a competitive market (and often with increased convenience), or the scalper can destroy the tickets and nobody can turn up the the event. They generally won't - that's irrational. Even if they did - it's not an ineficiency for the purpose of the original marketplace. In fact, it creates opportunity for extra production: the venue can arrange a late-entry-for-unfilled-spot policy which allows them to get people in and sell some tickets twice. Or the venue can detect scalpers and create a dynamic price market of their own and maximise their volumes. In the situation where multiple scalpers get the tickets and plan to sell them, there has been a massive gain in efficiency. The scalpers have removed the venue's monopoly power over ticket prices and created a second market place which will have more effective price discovery. Either way, the event provider is focussing on what they're good at, and the scalpers at what they're good at. Scalping is entreprenerial in spirit and good for the system in practice.
- Retric 17y ago
  The ticket seller might want a specific audience for demographic reasons, and or a sellout crowd for reputation reasons. Scalpers destroy this without giving a kickback to the ticket seller. They also increase the cost to the ticket buyers thus reducing market efficiency.
  - cturner 17y ago
    > The ticket seller might want But that's unrelated to market efficiency. People in this thread are trying to define "seller not getting what they want" or "particular type of consumer not getting what they want" into market inefficiency, and it doesn't work like that. I'm not an economist. Perhaps I'm wrong, but in this case please make the case in terms of a definition you can cite. (In practical terms, they seller could reach that aim by giving people a cashback at a random time during the event for those who turned up - for example swapping a single ticket for a cashback at the end of the show as people were leaving the gates. The reason venues don't like scalpers is that they don't like price discovery because of reasons like these: (1) they want to be able to make a killing on late tickets, even if it's only for a few events per year and (2) they want to be able to sell tickets to poor people through some mechanisms at one price, and tickets to richer people through different mechanisms at another price, such as through coupon clipping or discount books or through ticket offices in poor areas, (3) they don't want tickets won through competitions being given away. That way they get to charge wealthier people a higher price than time-rich people who are typically poorer. That's inefficiency.)
    - Retric 17y ago
      Transactions can involve more than just a single flow of cash in exchange for stuff. Economists can and do look at satisfaction as part of market efficiency which explains why people pay for status symbols. Someone buying a diamond for above resale price is not necessarily simply wasting money for zero gain. PS: Consider rather than a ticket scalper you had a group of bandits charging a toll to cross a bridge. They are not adding value to the experience of crossing a bridge and they are not helping the people who made the bride. So while arguably they increase GDP it's not a net gain for society.

cturner 17y ago

represents the creation of inefficiency rather than the remedying of it. I can't think of a situation where scalpers are not contributing to efficiency. I think you've focussed on intentions of particular parties in the scenarios rather than the net market and that this has taken you to an incorrect conclusion. With scalpers, the venue venue has their risk removed (they lock in their sales early), and the scalpers increase liquidity by removing the venue's monopoly power over pricing the event. And price discover is better. Now either the consumers are able to buy the tickets from the scalpers in a competitive market (and often with increased convenience), or the scalper can destroy the tickets and nobody can turn up the the event. They generally won't - that's irrational. Even if they did - it's not an ineficiency for the purpose of the original marketplace. In fact, it creates opportunity for extra production: the venue can arrange a late-entry-for-unfilled-spot policy which allows them to get people in and sell some tickets twice. Or the venue can detect scalpers and create a dynamic price market of their own and maximise their volumes. In the situation where multiple scalpers get the tickets and plan to sell them, there has been a massive gain in efficiency. The scalpers have removed the venue's monopoly power over ticket prices and created a second market place which will have more effective price discovery. Either way, the event provider is focussing on what they're good at, and the scalpers at what they're good at. Scalping is entreprenerial in spirit and good for the system in practice.

Retric 17y ago
The ticket seller might want a specific audience for demographic reasons, and or a sellout crowd for reputation reasons. Scalpers destroy this without giving a kickback to the ticket seller. They also increase the cost to the ticket buyers thus reducing market efficiency.
- cturner 17y ago
  > The ticket seller might want But that's unrelated to market efficiency. People in this thread are trying to define "seller not getting what they want" or "particular type of consumer not getting what they want" into market inefficiency, and it doesn't work like that. I'm not an economist. Perhaps I'm wrong, but in this case please make the case in terms of a definition you can cite. (In practical terms, they seller could reach that aim by giving people a cashback at a random time during the event for those who turned up - for example swapping a single ticket for a cashback at the end of the show as people were leaving the gates. The reason venues don't like scalpers is that they don't like price discovery because of reasons like these: (1) they want to be able to make a killing on late tickets, even if it's only for a few events per year and (2) they want to be able to sell tickets to poor people through some mechanisms at one price, and tickets to richer people through different mechanisms at another price, such as through coupon clipping or discount books or through ticket offices in poor areas, (3) they don't want tickets won through competitions being given away. That way they get to charge wealthier people a higher price than time-rich people who are typically poorer. That's inefficiency.)
  - Retric 17y ago
    Transactions can involve more than just a single flow of cash in exchange for stuff. Economists can and do look at satisfaction as part of market efficiency which explains why people pay for status symbols. Someone buying a diamond for above resale price is not necessarily simply wasting money for zero gain. PS: Consider rather than a ticket scalper you had a group of bandits charging a toll to cross a bridge. They are not adding value to the experience of crossing a bridge and they are not helping the people who made the bride. So while arguably they increase GDP it's not a net gain for society.