Scalping and Price Discrimination

All the major league sports teams are getting into scalping [Washington Post, reg. req’d].

NFL, NBA and NHL teams have partnered with Internet firms with names such as StubHub and RazorGator to reap a share of what is known as the “secondary ticket market,” where ticket holders can resell their tickets, often at prices well above the price they paid for them.

The emergence of these new enterprises ends years of frustration for sports teams, which have watched as scalpers and brokers sold tickets for several times their value without teams being able to capture any of that market.

At first blush, one wonders why the teams don’t just raise their ticket prices if they want to capture some of that market. But it is apparent that the demand for different events against different opponents generates different demand structures, and so single price monopoly models cannot be applied, especially not for all games throughout the entire season. In the past, scalpers have filled in the gaps, charging more than face value for popular events and charging less than face value for unpopular events.

But now the major league teams are getting into the resale business. And as this business becomes more lucrative, look for more teams to hold back a portion of tickets and “re”sell the tickets at (frequently, they would hope) much higher prices in the secondary ticket market.

A great example of price discrimination.

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Author: John Palmer

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