It’s been a while since we’ve commented on the secondary market for sports event tickets. Partly, I think, the practice has become legal and common in most circumstances and the on-line markets make the practice more transparent. What was once a seemingly repugnant transaction has been normalized. Or, at least, it is becoming normalized.
At the same time, the expansion of the ticket resale market does have some effect on the one issue at the heart of the sports business: revenue. If you want to get up-to-date on ticket resales and baseball, Dennis Coates at The Sports Economist points to a story from the Sports Business Journal about StubHub, MLB, and other resellers.
David Harrington has an article in the new issue of Regulation on the consequences of state repeal of laws that put caps on ticket resale prices: “Uncapping Ticket Markets.” Harrington used StubHub data to compare NHL ticket resale prices in states that repealed price caps on resales to prices in states that hadn’t changed laws. As the article subhead puts it: “In hockey at least, liberalizing scalping laws has benefited fans.”
Ticket scalping, like price gouging, is a usually pro-social market activity that is stuck with a pejorative name. At Swifter, Higher, sportswriter Kyle Whelliston writes about his experience picking up a cheap ticket into the first hockey game of the Vancouver Olympics. It wasn’t as easy as he hoped, but at a cost of missing the first few minutes of action he was able to get a price he liked.
What surprised me in the article was how well organized the gray-market activity was. I wonder whether the Olympics would increase or decrease overall ticket revenue by facilitating an active secondary market (assuming a secondary market was legal in the host country).
(Via Freakonomics blog.)
Al Roth at Market Design, “Reserving spaces in crowded places,” notes that authorities are cracking down on the illegal practice of reserving prayer spaces and renting them out to worshipers. He quotes from the Saudi Gazette:
“It is forbidden to reserve places in the mosques, unless the person has left for urgent reasons and intends to return soon, as otherwise it is tantamount to taking something by force,” Al-Fawzan told Okaz newspaper on Thursday. “It is also forbidden to rent a reserved place, and the authorities should put a stop to this vice (munkar).”
Note that in a market for prayer spaces, high-income and low-income persons can benefit. The low-income person (or more specifically, a person facing low opportunity costs) can earn money by holding a desired prayer spot and trading it to a high-income person just before prayer times. The banned practice would seem to create net economic benefits – price-based rationing tends to be efficiency enhancing – but this observation neglects any external spiritual or economic benefits that might accrue from high-income persons spending more time waiting in mosques.
Banning the practice seems to benefit the middle at the expense of the extremes, the middle being those people too busy to arrive too early, but too poor (or too pious?) to pay for a good spot. Henceforth, to signal piety or just get an otherwise desirable location, worshipers will have to show up early.
It would be interesting to know whether political connections (governmental or clerical) can obtain a desirable prayer spot without waiting. Can the right connections and a little influence buy what money cannot under the rules?
(Notice the similarity to rock concerts: when concert tickets are in excess demand and scalpers are prohibited, fans have to show up early. In the case of rock concerts in public stadiums, at least, a good political connection and a little influence usually secures a good seat.)
Al Roth at Market Design, directs our attention to The Ticket Economist:
Grownup economists recognize that there’s a place for secondary markets, but I wonder if a convention of ticket re-sellers doesn’t have something of the flavor of a sex-workers’ conference, in the sense that the participants are engaged in an industry that is often viewed as repugnant, and which is hemmed in by legal constraints that are sometimes ignored.
My attention was drawn to the conference by one of the speakers, Christian Hassold, who I met when he did an undergrad thesis on secondary ticket sales. … [Hassold], who is now off in the entrepreneurial world, has continued to write about ticket sales on his blog The Ticket Economist.
He always seemed like the kind of guy you would like to take in a game with, and it turned out that he’s good at getting tickets too: his blog mixes reviews of news and scholarship with some practical advice: see e.g. Buying from a Scalper? Five Do’s and Don’ts, and Bargaining for Tickets on the Street. [Links in original.]
Hassold highly recommends a paper by Phillip Leslie and Alan Sorensen: “The welfare effects of ticket resale.”