Question

Tickets to athletic and artistic events are sometimes resold at higher-than-original prices – a market transaction known by the term “scalping.” For example, the original buyer may resell a $50 ticket to a college bowl game for $200, $250 or more. The media often denounce scalpers for “ripping off” buyers by charging “exorbitant” prices.

From an economic perspective, is ticket scalping undesirable? Who is benefiting and who is losing?

Answer 1

From an social perspective, ticket scalping is undesirable. It basically means that you are charging high amount for a resonable product. Black marketing & parallel unlegalized markets work on this concept.

However, from an economic perspective, ticket scalping in not undesirable. Lets take an example of concert of Adele. Its being held in a stadium with a capacity of 100 people( lets assume). Now when the ticket go to sales through online channels, there will be rush of people who would want to be in that stadium to see the concern. Clearly there is supply shortage against high demand. In this case, people will be willing to pay a higher price for the $50 ticket. Clearly, the person who was the early buyer benefits. since the Marginal utility of that ticket to other buyers has increased. So the the person who has bought this ticlet can charge a higher amount of say $200-250/ticket.

But the clear loser is this game are the buyers who want to buy this ticket. Since, online channels cannot increase the price of the ticket. The buyers have to pay high amount of price to scalpers.