Tickets, Prices and Markets

I will admit, when I first saw this article from The Seattle Times on Mark Perry's blog yesterday, I failed to connect the dots. However, it has been in the back of my mind, and this morning I saw some connections.

The article is about a ticket reseller (scalper) who is suing the city of Seattle, the Mariners baseball team, and a couple of police officers. He feels his rights are being infringed. The argument of restricting voluntary trade between buyer and seller is an interesting one for economics. We often teach that voluntary exchange takes place because both parties benefit.  Because the exchange is voluntary, and because we assume that both parties are seeking to maximize their benefits, we say that both parties benefit because they each receive something they value more in exchange for something they value less.  I even point out to my students that, because of that point, an exchange in the market place is as much about disagreement - about relative values - as it is an agreement.

This story gains interest when we consider other actions against by ticket brokers against firms like Ticketmaster, as illustrated in this article from The Wall Street Journal earlier this month.

This issue can be used discussing things like consumer and producer surplus. Consumers willing to pay more than face value for a ticket would indicate there is some producer surplus to be captured. One can certainly see where that might be a cause for concern among the original producers of the service.

Another way to use this issue is with discussions of risk. Resellers (or scalpers, take your pick) often take significant risks - buying tickets only to find the demand does not materialize.

And when discussing demand, one can talk about elasticity for the item. A colleague of mine talks about time-sensitivity as a factor in demand elasticity. The more immediate their want, the less elastic is the demand.

I would think the topic of ticket reselling would provide an interesting discussion point for any of these concepts, and maybe even a few others (please share your thoughts).

If you decide to use this in the classroom, there are a couple of podcasts that also may be relevant. You might even pick up a couple of "quotes" to put at the front the room to spark reaction, or serve as the basis for your discussion. Both are from the EconTalk web site. And both are about an hour in length, so you may not want to use them in full in class. Whether you want to "assign" them, I leave to your judgment.

The first is an interview between EconTalk host and George Mason University professor, Russ Roberts and Duke University professor Mike Munger on ticket-scalping.  The second is a podcast featuring Roberts (an avid baseball fan, by the way) and an actual scalper. Both are quite entertaining and thought-provoking.