[brianpan]

I'm definitely not an econ expert (far from it). Scalpers may not be confusing demand. But aren't they're artificially constraining supply? There are a limited number of shows and seats available.

If I'm a scalper and I buy the last 100 seats (or rather, I have the last 100 seats not taken by someone who actually is going), I can now sell the tickets at a premium. If there are only 75 more fans that want to go, they are forced to come to me and the prices go up artificially. I can still profit without selling all the tickets. Without me the scalper, there would have been enough tickets to go around at face value.

Yes, the price is going up because people are willing to pay for it, but without the scalper it wouldn't have happened.

[xenophanes]

It's not scalpers who are constraining supply.

If a show has 1000 seats, and 900 fans buy the first 900, and never consider reselling at any price, then they are the ones constraining supply relative to an efficient market. (And there's nothing wrong with that, shrug.) The scalpers, by reselling tickets instead of just holding them and ignoring the market price, actually are increasing the amount of tickets available on the market, not lowering it.

Imagine if there were zero scalpers. Then it sells out and price goes to infinity. How can price go to infinity? Because supply is being constrained to zero because people refuse to consider reselling. Scalpers delay that some and keep the market more robust, while also making a profit from underpriced tickets.

And you can never ever sell a ticket to someone for more than the value of the show to them, so the buyers never lose.

All they are "losing" is the ability to get underpriced tickets (tickets for less than they are willing to pay) from the original seller who could have charged more (since he controlled all the tickets) but, for whatever reason, preferred to leave some money on the table for scalpers.

[vacri]

wow... you consider a market to be something which maximises all possible monies rather than something where you obtain something for use. No wonder this 'scalpers are helping the system' theme sounds crazy.

[pessimizer]

No, xenophanes is simply explaining how markets work. Markets are supposed to maximize utility, whether that be monies or laughter at a concert. If a price is too low for demand, any opening that allows middlemen to creep in, raise the price to demand levels, and take the difference, will be taken. If the resellers price too low, they'll just generate an opening for re-resellers.

The problem, for me, isn't with scalpers, it's with income and wealth distribution (which separates nominal demand from actual benefit to useful people), with over-regulation of commercial performance (limiting the number of venues through regulatory capture), and with the destruction of local community (since there are no local acts anymore, everyone chases the same small number of national and international ones.)

Of course Louie C.K. generates a massive demand - in a country of 300 million people, he's one of the 50 comedians that anybody has heard of because he makes it into the national media. When the average person can name a few comedians that live and work in their neighborhood, going to a Louie C.K. show will be considered a luxury good AND the price will go down.

[vacri]

Part of my response to xenophanes' comment is a visceral response to treating a 'robust market' as a target goal, rather than a journey to an outcome.

The cost of ticket 1001 to a 1000-ticket show is infinity, regardless of whether you have scalpers or not. Increasing the price of the last 100 tickets does not mean you have increased ticket supply, all it means is you have taken 100 tickets from earlier, creating an artificial scarcity, and sold them later. Those hundred buyers that 'don't lose' down the track do so at the expense of a hundred buyers that lost earlier.

xenophanes is making funny with numbers because he's comparing the price of ticket 1001 in the non-scalper system with the price of ticket 901 in the scalper system.

[pessimizer]

I don't think he/she is. There might be 20,000 people interested in tickets to the show at $55, but only 1000 will get one and 19,000 will be left out in the cold. If 100 of those tickets are purchased by scalpers, 19,000 will be left out in the cold. The difference in the two cases is that 100 of those tickets in the second case will go to the people willing to 'be the most useful' for them - and in an ideal society that seems to me like the fairest way of doing things.

The only problem I have with it is that due to general political market distortions, money is very cheap to a small number of people who do very little and have lots of leisure time, so the dollar commitment for a ticket price has little relation to either subjective or objective (ideal) utility.

As a performer, I'd have an interest in keeping the ticket prices low simply because I wouldn't want an audience filled with the kind of assholes who would pay $500 for a ticket to a two hour comedy show. If I really adored Louie C.K., was one of those assholes, and it took 11 minutes to get to the site to buy a ticket that sold out in 10, I'd hope that scalpers got a significant amount of those tickets.

Hell, even if I wasn't one of those assholes I'd hope for scalpers, because if they overestimated demand and priced too high, they might end up dumping tickets at the last minute and I might end up paying less than face value. Instead of not being able to get a ticket at any price, the tickets are handed out based on how much you're willing to commit to get them. If demand then raises the prices to $1000, I can still get a ticket if I love Louie C.K. more than I love keeping my apartment.

Because, really:

the number of people who lose = the number of people who would go to the show for free - 1000

Personally, I lose at face value, because the day I pay $50 for a concert is going to be the day a gallon of milk goes for $15. It doesn't mean that I don't like Louie C.K., it just means that I like 3 gallons of milk more. Everybody makes their own call, whether it's when the cost goes over $10, over $1000, or over $55 + F5ing a site for 6 hours.

[jessriedel]

In the short term, there are a fixed number of hard drives (and beach balls, and microwave ovens, ...). Why don't we have to worry about hard drive scalpers artificially constraining the supply?

[jamesbritt]

Interesting question. It made think of another situation.

How often would CK have to perform to make scalping essentially a non-issue?

More than once a year I would guess. But once a month? Every week?

What factors determine this?

[jessriedel]

It would be determined mostly by price, and this would just be another version of the supply/demand curve. If he sells the tickets at $20 each, then 100k will want to see his show. At $50 each, 10k people, and so on.

[invisible]

There is a much smaller quantity of seats that need to be acquired to scalp the market and push out competition. The spread is much higher if you know there is a relatively high demand that cannot be justifiably spent elsewhere.

[brianpan]

Shows are much more constrained. It's the very specific "skilled labor" involved (only one person can produce a show in only one city, maybe two a night). Imagine if you needed a hard drive factory in each city and only one factory could run at a time.

I can't buy a show for Denver. I might not even be able to buy a show for Friday nights. That severely limits the pool of "supply" I can buy from. Louis might be in my city once a year for a few days if I'm lucky.