Ticketmaster and the secondary market for tickets, by Budish and Bhave

 Here's a still-timely paper that was a work in progress for quite a while.

Primary-Market Auctions for Event Tickets: Eliminating the Rents of “Bob the Broker”? By Eric Budish and Aditya Bhave, American Economic Journal: Microeconomics 2023, 15(1): 142–170 https://doi.org/10.1257/mic.20180230 

Abstract: "Economists have long been puzzled by event-ticket underpricing: underpricing reduces revenue for the performer and encourages socially wasteful rent-seeking by ticket brokers. What about using an auction? This paper studies the introduction of auctions into this market by Ticketmaster in the mid-2000s. By combining primary-market auction data from Ticketmaster with secondary-market resale value data from eBay, we show that Ticketmaster’s auctions “worked”: they substantially improved price discovery, roughly doubled performer revenues, and, on average, nearly eliminated the potential arbitrage profits associated with underpriced tickets. We conclude by discussing why, nevertheless, the auctions failed to take off."

From the conclusions:

"over the decade that has passed since the time of the data, rather than coming into more widespread use, primary-market auctions for event tickets instead disappeared. LexisNexis searches suggest that TM auctions were in use from their introduction in 2003 through around 2011, with a peak in around 2005–2008 but that with limited exceptions, they have not been used since.33

"We conclude by speculating as to why the auctions failed to take off. As discussed in the introduction, economic theory suggests that there are two basic choices for how to eliminate the rents of and rent-seeking by Bob the Broker: ban resale or set a market-clearing price. While auctions are no longer in use, what has at least partly taken off is using available data, including historical resale values, to set fixed prices in the primary market that more accurately approximate market clearing.

...

"We conjecture that the popularity of this practice relative to auctions partly reflects the simplicity and convenience for fans of posted prices relative to auctions, as has been documented more widely by Einav et al. (2018) and partly reflects a harder-to-model “repugnance” cost of ticket auctions (Roth 2007). 

...

"Setting market-clearing prices and banning resale are two ways to modify the primary market to eliminate Bob the Broker’s rents. TM has also aggressively expanded into the secondary market, acquiring TicketsNow for $265 million in 2008 (as well as UK-based Get Me In! for an undisclosed amount); entering into secondary-market partnerships with the National Basketball Association, National Hockey League, and National Football League (Major League Baseball has a partnership with StubHub); and most recently launching a secondary market within ticketmaster.com called Fan-to-Fan Resale that lists available primary-market tickets alongside secondary-market tickets.38 This business exploits TM’s unique ability, for events where it manages the primary market, to verify the authenticity of tickets in the secondary market. With transaction fees of about 30–40 percent in the largest secondary-market venues (Budish 2019)—of the full resale value, not of just the markup versus the fixed price—perhaps eliminating the rents of Bob the Broker is less profitable than taking a cut."

High prices and moral outrage, by Elias, Lacetera, and Macis

 Is Uber-style surge pricing immoral, or efficient?  How about price rises during a pandemic? Does discussion of the economic consequences change the assessments of morality? Here's a new NBER paper:

Is the Price Right? The Role of Morals, Ideology, and Tradeoff Thinking in Explaining Reactions to Price Surges  by Julio J. Elias, Nicola Lacetera & Mario Macis, NBER WORKING PAPER 29963, DOI 10.3386/w29963, April 2022

Abstract: "Price surges often generate social disapproval and requests for regulation and price controls, but these interventions may cause inefficiencies and shortages. To study how individuals perceive and reason about sudden price increases for different products under different policy regimes, we conduct a survey experiment with Canadian and U.S. residents. Econometric and textual analyses indicate that prices are not seen just as signals of scarcity; they cause widespread opposition and strong and polarized moral reactions. However, acceptance of unregulated prices is higher when potential economic tradeoffs between unregulated and controlled prices are salient and when higher production costs contribute to the price increases. The salience of tradeoffs also reduces the polarization of moral judgments between supporters and opponents of unregulated pricing. In part, the acceptance of free price adjustments is driven by people’s overall attitudes about the function of markets and the government in society. These findings are corroborated by a donation experiment, and they suggest that awareness of the causes and potential consequences of price increases may induce less extreme views about the role of market institutions in governing the economy."

From the conclusions:

"Our findings support the claim that people do not perceive prices as only signals of relative scarcity, but they attribute moral valence to them. Consistent with prior studies, price spikes in response to demand increases receive widespread opposition and generates moral aversion, mainly out of concerns for fairness toward and exploitation of consumers. Moreover, underlying ideological positions about the role of the market (and the government) in society significantly affect the perceptions and acceptance of price surges. However, when made explicit, economic or tradeoff considerations substantially increase the public’s acceptance of price increases in response to demand surges. The reaction to these economic considerations also concerns moral judgments; tradeoff salience increases people’s acceptance of price surges and changes their moral reactions to these increases. When individuals are prompted to consider the economic consequences of freely adjusting prices versus price controls, their moral judgments are less radical and less different from one another. 

...

"Despite the large positive impact of explicit cost-benefit considerations on the acceptance of the free price mechanism to organize markets, most respondents, even when assigned to scenarios with salient tradeoffs, did not support a “laissez faire” solution to price surges. This suggests that this opposition is rooted in strong beliefs and norms whose violation could represent a cost to society. Policy choices and organizational practices that reduce the likelihood of price spikes may therefore be supported by the public."

Allocating scarce positions to avoid scalpers (avoid first come first served): by Hakimov, Heller, Kübler and Kurino

How to Avoid Black Markets for Appointments With Online Booking Systems
Rustamdjan Hakimov, C.-Philipp Heller, Dorothea Kübler, Morimitsu Kurino
July 25, 2019

Abstract: Allocating appointment slots is presented as a new application for market design. We consider online booking systems that are commonly used by public authorities to allocate appointments for driver's licenses, visa interviews, passport renewals, etc. We document that black markets for appointments have developed in many parts of the world. Scalpers book the appointments that are offered for free and sell the slots to appointment seekers. We model the existing first-come-first-served booking system and propose an alternative system. The
alternative system collects applications for slots for a certain time period and then randomly allocates slots to applicants. We investigate the two systems under conditions of low and high demand for slots. The theory predicts and lab experiments confirm that scalpers profitably book and sell slots under the current system with high demand, but that they are not active in the proposed new system under both demand conditions."

Ticket scalping in Hong Kong

I don't know how big of an issue it is, but this story on ticket scalping was prominently displayed in the South China Morning Post the other day:

 Touts snap up tickets as Hong Kong fans queue overnight for chance to see Dayo Wong.  Scalpers operating in city despite leader’s promise to crack down on practice, which leaves fans facing exorbitant fees

"The promise by Hong Kong’s leader to clamp down on the black market for show tickets appears to have done little to deter the city’s ticket touts."

High frequency ticket buying, by scalper bots

Freakonomics asks Why Is the Live-Event Ticket Market So Screwed Up?

They talk to a bunch of good economists.  Here's Eric Budish on the subject of why it's odd that tickets are "underpriced," in the sense that it's profitable for software bots to buy them up before the humans can get in the act, and then resell them...

"BUDISH: That’s competition on — to an economist — a strange dimension: competition on speed rather than price; that’s the connection to my stuff on high-frequency trading. It’s competition, but it’s not a productive form of competition."

Read (or listen) to the whole thing at the link.

Hurricanes and price gouging (and watermelon)

Accusations of price gouging don't just concern food and water and plywood and gasoline: nowadays we evacuate by airplane as well. But last minute bookings are always expensive...

Airlines Face Criticism Amid Irma Price-Gouging Complaints
"Florida residents have been logging their compaints about unfair pricing of items like water and gasoline, along with airfares, with the office of Pam Bondi, the attorney general of Florida. There have been more than 7,000 since Monday, the attorney general said on Friday.

In their letter to Transportation Secretary Chao, Senators Blumenthal and Markey wrote:

“Airlines certainly have a right to a reasonable return for services rendered and vagaries in pricing are to be expected; but airlines have no right to impose exorbitant, unfair prices on Americans simply trying to get out of harm’s way.”

Florida Representative Charlie Crist also wrote a letter to Ms. Chao, calling for an investigation of United Airlines after receiving several complaints over airfare increases.

...

"“If there’s any gouge, it’s just the last minute walk-up airfares that are designed for desperate business fliers,” Mr. Hobica said. “It’s just the computer programs doing what they do when it’s last minute and seats are scarce.”

Delta, the target of the initial viral complaint, has denied changing its pricing structure leading up to Irma’s arrival and has capped its one-way fares out of South Florida at $399 through Sept. 13 (other airlines like JetBlue lowered one-way fares to as low as $99.) "

***********
I've never been able to track down if it's a true story, but I've heard over the years of some hurricane in which people both lined up to buy some essential good at a very high price, and then clapped when the police showed up to arrest the purveyors for price gouging and confiscate the goods.
Stephanie Wang points me to this second or third hand account, where the good in question is ice.

They Clapped: Can Price-Gouging Laws Prohibit Scarcity?

*********
Here are two recent articles, con and pro on raising prices in an emergency (they both have a picture of empty shelves...)

Memo to economists defending price gouging in a disaster: It's still wrong, morally and economically  by Michael Hiltzik

Price Gouging Can Be a Type of Hurricane Aid
Higher prices can help resources get to the people who need them most.
by Tyler Cowen

**********
Of course, not all accusations of price gouging arise from emergencies. Consider the watermelon. The Jordan Times has the story:
Petra diner closed temporarily for ‘overpricing melon’  Photo of fat bill goes viral, triggers anger, mockery

"AMMAN — The Petra Development and Tourism Region Authority (PDTRA) on Wednesday decided to extend the closure of a tourist restaurant over an over-priced bill of a watermelon.

"A photo of the bill went viral on social media sites, triggering both angry reactions and mockery.

"PDTRA President Mohammad Nawafleh told The Jordan Times on Thursday that the restaurant, whose rent contract had already expired on July 15, will be closed for two months for selling a water melon for an unreasonably high price and serving food items that are not listed on its menu.
...
"Commenting on the issue, Tourism Expert Sami Hasanat said that such overpricing would harm the “already deteriorating” sector in the Kingdom.

"Authorities have to ensure that prices are always within the “reasonable” levels, as prices would affect the turnout of tourists, added Hasanat, a former MP."

Scalping Hamilton

The NY Times has the story: How Scalpers Make Their Millions With ‘Hamilton’

"For most of May, the median price of a ticket on the secondary market was around $850. Between the Tonys and the July 9 performances, it pushed toward $1,600. Before Mr. Miranda’s announcement of his departure, ticket holders were offering a seat for the July 9 performance at an average of $2,700. With the news of his exit, the average asking price quickly climbed to $10,900 a seat.

"Mind you, the average face value of a “Hamilton” ticket was $189.
...
"Scalping can be explained with high school textbook economics. When ticket prices are set too low to balance demand against the supply of seats, any person holding a ticket can find a sea of buyers willing to pay more than asking price for the seat.

"Increasingly, that ticket holder is not a guy at the theater door with an extra ticket. It’s a person employing sophisticated software, a so-called ticket bot, to buy a huge number of tickets moments after the theater releases them. In the time a human buyer can find the calendar feature on a ticket site, a scalper’s network of hundreds of bots has already bought the maximum limit of tickets for multiple days of shows.
...
"Because the secondary market is scattered across dozens of websites and storefront services, its size is hard to establish. Overlapping ticket inventories also make prices hard to track. Websites like StubHub, SeatGeek and Ticketmaster re-list more than 35 percent of the 1,321 seats sold in the Richard Rodgers Theater, on average, for each of the eight “Hamilton” performances a week. By placing initial box office sales and secondary market resales side by side, they provide a veneer of legitimacy (and an illusion of regulatory transparency) for scalpers.

"Such a strong scalper-driven secondary market is relatively new to Broadway, though sports fans and concert goers have long encountered inflated prices for big games or Beyoncé concerts.

Every performance of “Hamilton” is a miniature Super Bowl, in terms of demand and resale activity. Fans can still get a seat at “Hamilton” for less than a thousand dollars, if they are willing to wait for it — either buying months in advance from the theater or just hours before a performance, as scalpers drop their asking price.

"Looking across nearly 100 days of “Hamilton” performances, we found that the median resale ticket price was nearly $1,120 a seat. By our analysis, scalpers were earning more than six times what they paid for their tickets.

"The “cheap” seats in the mezzanine and orchestra sides sell for more than 10 times their face value on average. Premium orchestra seats sell for nearly six times their face value on average.
...
"For a website that is trying to detect scalping, the challenge is finding the bots among the humans. It is not as easy as it sounds. To avoid detection, sophisticated scalpers use bots designed to look like humans, although they use the website far more efficiently. Bots don’t misclick or need to use the delete key, though they may do that as well, in order to further obscure the evidence of a nonhuman purchase.

"The masquerade is important because “Hamilton” cancels what it deems to be bulk ticket purchases. The lead producer, Jeffrey Seller, has described canceling the purchases of one bot that had accumulated 20,000 tickets for “Hamilton.”

It is an uphill battle. Bot-driven ticket buying has been illegal in New York since 2010, yet its use is still widespread. When they are networked, bots can play a big role in distorting ticket prices. Bots can drive significant traffic on Ticketmaster.com, up to 90 percent of ticketing-purchasing activity at times."

Scalping tickets to see the Pope

The NY Times has the story: After Lottery in New York to See Pope Francis, Some Winners Scalp Tickets Online

"Tickets to the Central Park procession have been offered on eBay from $200 to $400.

The mayor’s office vowed on Friday to crack down on online scalpers, and officials said that eBay and Craigslist had been quick to remove the ads at the city’s request.

“The city, along with the United States Secret Service, are monitoring ticket sales sites to remove tickets that are for sale,” said Monica Klein, a spokeswoman for Mayor Bill de Blasio.
...
"Roman Catholic Church officials have been predictably unhappy that some are seeking to capitalize off the chance to glimpse the pope.

“Papal tickets are never intended to be sold,” said the Archdiocese of Philadelphia in a statement, adding that it had asked eBay and Craigslist to remove the ads. “Scalping of tickets to papal events is shameful and reprehensible.”

New markets for restaurant reservations

Move over, Open Table.  Matt Buchanan has the story in the NY Times: Can You Uber a Burger?

"In recent months, as retail rents have risen in cities like New York and San Francisco, and as food prices have simultaneously hit three-year highs, various companies have been trying to find new ways to monetize the restaurant experience. Inspired by how we pay for concerts, airline tickets and, more recently, transportation through the car-hailing service Uber, more and more apps and reservation systems have homed in on disrupting a fundamental ritual: how we book a table.  Table 8 in San Francisco sells reservations at popular restaurants just days in advance; Zurvu scours the best open tables on OpenTable; Reserve, a start-up created by founders of Uber and Foursquare, aims to be a full-fledged digital concierge; SeatMe, which was acquired by Yelp, allows restaurants to ping eager diners if tables open up at the last minute. “This is a space that hasn’t seen a lot of innovation since 1998,” which is “when OpenTable first started taking online reservations,” says Brian Mayer, the founder of ReservationHop, yet another new reservation-­selling service. This summer, McNally’s restaurant group teamed up with Resy, a service that sells reservations for tables at peak times.
...
"Nick Kokonas, a former derivatives trader who is an owner of the exclusive Chicago restaurants Next and Alinea, has found perhaps the most clever way to solve this problem. Kokonas has developed a system that requires diners to pay for a ticket to reserve their spot, with that money deducted from their final bill. While he has employed a version of the system for his expensive tasting menus, he expects tickets at more casual restaurants to take the form “of a deposit ticket of $5 to $10, fully applied to the bill.” According to Kokonas, restaurants using pilot versions of his system have seen no-show rates drop to less than 2 percent.
...
"a number of services have emerged to book reservations without a restaurant’s knowledge and sell them to diners, while cutting the restaurant entirely out of the transaction. Sophie McNally, the operations manager of her father’s restaurants, described these services as “basically scalpers.” Some, like Today’s Epicure, frame themselves as a concierge service, charging a large annual fee. Killer Rezzy, which charges its 6,103 members $25 per reservation, books tables at 78 restaurants — a sizable fraction of which have teamed up with the service. Killer Rezzy tries to lure restaurants, however, through revenues from the reservations it sells and access to the profiles of its members, enabling them to better target potential diners. Sasha Tcherevkoff, its founder, said that roughly 40 percent of the restaurants that initially asked him to remove their reservations from his site ultimately either signed on for a trial or became partners.
...
"Kokonas, Leventhal and Tcherevkoff all have much larger plans for their services as logistics with a broad range of applications. “Nonemergency medicine, spas, your personal trainer,” Kokonas says. “Anything that’s a time-slotted business.” Have your tickets ready."

Scalper resistant Super Bowl tickets

Assaf Romm points me to the story: Take that, Super Bowl scalpers! Ticket-lottery winners to get non-transferable tickets

"Every year, the NFL holds a lottery for football fans for the next year’s Championship. Some 30,000 people entered this year, McCarthy said. The number of winners will double to 1,000, McCarthy said, and the price of the ticket will drop to $500, from last year’s $600.

But there’s a catch. Winners won’t get their tickets until game day, and they won’t be able to leave the stadium after receiving them, McCarthy said.

“The point is we want these people going to the game,” McCarthy said. “So you can’t turn around and sell them to a scalper.”

Why it's hard to get hot restaurant reservations or concert tickets (and why concierges sometimes can)

It turns out you need professional gear to get some reservations: the New Statesman has a report from the front.

The Bot Wars: why you can never buy concert tickets online

Enterprising programmers are creating bots that can reserve, and in some cases buy, everything from restaurant tables to eBay goods before humans can even get a look in. Where will the bot wars end?

"Just as high frequency trading, via automated software, took over the financial markets in the early 2000s, the use of bots is a technique that is increasingly coming to dominate online sales of all stripes."
*********
Some of my earlier posts on this subject here,  here and here  focused on concert tickets and professional re-sellers (scalpers) who sometimes skirt the law.


HT: Dean Jens

Misc. repugnant transactions

Sometimes some transactions are so repugnant that nothing but an armed response seems sufficient:

Multi-agency armed raid hits Rawesome Foods, Healthy Family Farms for selling raw milk and cheese
"A multi-agency SWAT-style armed raid was conducted this morning by helmet-wearing, gun-carrying enforcement agents from the LA County Sheriff's Office, the FDA, the Dept. of Agriculture and the CDC (Centers for Disease Control)."

HT: Zane Selvans
***********************

Workplace romance is often regarded as a repugnant transaction, and the rules that different universities try to enforce are varied. Inside Higher Ed reports:

"According to the American Association of University Professors,policies regarding relationships between students and professors vary across the country. Some institutions, such as the University of Michigan, do not expressly prohibit faculty-student relationships, but advise faculty members against them and require faculty members to notify superiors of relationships to avoid conflicts of interest. The University of Iowa prohibits faculty members from entering into romantic or sexual relationships with students they are instructing, evaluating, or supervising.
...
In recent years, several campuses have implemented “zero-tolerance” policies. In 2003, the University of California adopted a policy prohibiting romantic or sexual relationships between faculty members and students they are teaching or have a reasonable expectation of teaching in the future. Last year, Yale University adopted a policy expressly prohibiting relationships between faculty members and undergraduate students, regardless of whether there is any chance the professor will teach the student. “Undergraduate students are particularly vulnerable to the unequal institutional power inherent in the teacher-student relationship and the potential for coercion, because of their age and relative lack of maturity,” the policy states."
*************

Revisions to old laws against scalping tickets to sporting events (reselling them at much higher than face value) are under discussion in MA: For ticket resellers and fans, the game may be changing

"Massachusetts is one of five states with laws strictly limiting what resellers can charge. But with hundreds, maybe thousands, of outlets reselling tickets online and offline, the law is difficult to enforce. Plus, ticket scalping is viewed as a victimless crime.

"But by this time next year, legislation under consideration on Beacon Hill could, if passed, make the secondary market in Massachusetts a much different place for fans and licensed resellers. Some overhaul of ticket reselling regulations appears to have legislative support, but it is unclear what form it might take, or whether it would pass. Hearings are scheduled for this month.

One of the bills comes from state Representative Michael Moran, Democrat of Brighton, who has proposed legislation to make the secondary market fully legal - and perhaps more fan-friendly.

"The proposed law would remove most restrictions on reselling tickets, effectively uncapping the secondary market, and institute greater consumer protections regarding refund and cancellation policies."
*********
And finally:

England players warned about their behaviour after night out at 'dwarf-throwing' bar

"Headlines on Thursday morning alleged that Tindall, who recently married the Queen’s granddaughter, Zara Phillips, was acting inappropriately while drinking in a Queenstown bar last Sunday, where a “dwarf-throwing contest” was the primary entertainment."

LCD Soundsystem and ticket scalping

Jacob Leshno (who is a fan of both market design and LCD soundsystem) writes to alert me to some stories about their "final" concert today, how scalpers using software bots acquired most of the tickets as soon as they went on sale, and how the band responded by scheduling more concerts.

Hipsters v. Scalpers: How LCD Soundsystem is trying to foil professional ticket resellers.
"But LCD fans were not left out in the cold. The debacle attracted the wrath of the band's charismatic front man, James Murphy. On LCD Soundsystem's blog, he wrote: "this here is just to say that we were more than taken aback and surprised about the speed of ticket sales for the april 2nd MSG gig, as well as the effectiveness of scalper pieces of fucking shit at getting their hands on said tickets before fans could, and it's knocked us on our asses."

"The market had failed in his mind. He told fans not to pay thousands of dollars to get into the Madison Square Garden show: "I will try to figure a way out to fuck these fuckers. NO MATTER WHAT WE DO, IT IS NOT WORTH THAT KIND OF MONEY TO SEE US!" Soon enough, he realized he had an ace up his sleeve. He flooded the market, adding shows, upping ticket supply, and hopefully pushing prices down. (Those shows will go on sale this Friday.)"

See also
Tickets To Hide: Bands that scalp their own tickets and other true tales from the world of live music.
and
fuck you, scalpers. terminal 5 shows added.

Scalping world peace as NY ticket resale laws expire

The NY Times reports on Scalping World Peace, Outside Radio City
"The appearance of the Dalai Lama at Radio City Music Hall has inspired a certain chant on the Avenue of the Americas.

“Tickets for the Dalai Lama, tickets,” intoned a not-particularly-spiritual-seeming 55-year-old scalper from Brooklyn, standing on the corner of 50th Street on Friday afternoon. “Anyone selling tickets? Tickets.
...
“It’s difficult to bargain with Dalai Lama fans,” Richie said later. “They don’t even know what ‘orchs’ are,” meaning orchestra seats. “They’re always looking for cheap seats. They have no concept of premium seating.” "

This is taking place in an unsettled legal environment: The Times reported last week
Legal Ticket Scalping Law to Lapse as Albany Debates a New Provision, and here's yesterday's Daily News: Gov. Paterson reenacts 1920s ticket scalping law, serving notice to StubHub, Ticketmaster and others

Wiseguy Tickets

If I were planning to break the laws on ticket resales, I think I would refrain from calling my company Wiseguy Tickts: 4 Charged in Concert Ticket Resale Scheme

"Federal prosecutors in New Jersey said on Monday that four men operating under the name Wiseguy Tickets had broken into online sites, buying more than one million tickets to some of the country’s most popular musical and sporting events and then reselling them for more than $25 million in profit.
In its 43-count indictment, the prosecutors say the men built a computer network that created thousands of fake accounts and built a program that could outsmart the ticketing software that creates oddly shaped letters intended to require human verification.
The events affected by the scheme cut across a wide swath of the entertainment business, from Hannah Montana concerts to Broadway shows and New York Yankees playoff games. The verification systems of many major online ticket vendors, including Ticketmaster, Telecharge and Major League Baseball, were breached."

Scalping free ice skating at Fenway

The mayor is shocked, the Globe reports

Scalpers cloud free skating at Fenway: City protests as rink tickets are hawked at high prices

"Scalpers used to hawking game tickets at exorbitant prices are now doing the same with tickets that were supposed to be free for city residents to ice skate at Fenway Park, in what could be the first trip for many to the hallowed field.
Tickets for the extraordinary skating opportunity at Fenway, handed out to city families as part of Boston’s New Year’s celebrations, were going for as much as $1,800 for four on websites such as Craigslist and eBay, outraging city officials and event organizers who want to know the identities of the people conniving against others for a buck.
“These are free tickets that were arranged to be given to City of Boston residents to skate free at Fenway Park, they weren’t meant for people to make money off of,’’ Dot Joyce, a spokeswoman for Mayor Thomas M. Menino, said yesterday. “It was really the mayor making sure the residents of this city get something back, especially young people who, given this is Fenway, it might be their only chance to be there.’’
The city organized the skating event for two consecutive Sundays, Jan. 3 and Jan. 10. Event organizers were taking advantage of the ice rink set up at the ballpark as part of the 2010 National Hockey League Winter Classic Game on New Year’s Day between the Boston Bruins and the Philadelphia Flyers. More than 38,000 fans are expected to head to that special event, and tickets to the game were going for as much as $700 on websites.
The scalpers’ postings for tickets to skate at Fenway are clear and blunt. One went: “I have 12 tickets total, will sell all for $4,000. 4 tickets for just $1,800. Once in a lifetime opportunity! No sob stories please prices are firm. Hard tickets in hand. I was given these tix by menino directly and I will be there to ensure your entire party gets into the park. . . . VIP tickets include a meet and greet with Bruin Old Timers and free hot chocolate and donuts.’’

The identity of the scalper was not known last night. Reached by e-mail, the scalper responded, “Buy 4 and I will give you an interview.’’ The message came from a Verizon Wireless BlackBerry. When told the Globe would not buy the tickets but still wanted an interview, the scalper responded “No Thanks, Pal.’’ "
...
"Hundreds of residents across the city had tried to get tickets on Saturday, but were turned away because they ran out so quickly. Tim Theriault, 53, of the South End, showed up at the Boston Public Library, only to be told 200 tickets were gone in 15 minutes.
He was disappointed: “Skating in Fenway Park would have been a one-time experience,” he said. But he was more disturbed that someone would take the opportunity to cash in at such exorbitant prices, saying “that’s disgusting.”
“I wish the city could do something, but what can they do,” he said. “That’s just really horrible, really bad.”
Bill Zeoli, a 44-year-old from the South End, waited in line first at the Blackstone School in the South End for close to two hours, then in Chinatown for nearly two hours, and still didn’t get tickets.
But Zeoli, who for years ran a pushcart outside Fenway Park and still goes to Red Sox games regularly, said he recognized some of Fenway’s regular scalpers among the moms and dads waiting in line with their children, and already thought the worst.
“There were absolutely scalpers that I’ve seen for years and years and years,” he said."

A subsequent story indicates that the city will try to enforce the no-scalping policy, but it's not clear if they can do more than check that skaters are Boston residents, since (among other things) some of the tickets could have been given as Christmas gifts: City to check for Fenway scalping: Menino angry, vows to monitor free skate event
"Plans are to spot-check tickets at Fenway. If the registered ticket holder is not present (only one person needed to register for four tickets), then the skaters will be turned away, Menino said.
But some who waited hours in the cold Saturday, such as Jim Cloherty of Hyde Park, had planned to give the four-pack of tickets as a Christmas gift.
“I already gave them to my niece and nephew and brother and sister,’’ said Cloherty, 59. “I got in line for them, because I can’t skate.’’ He explained that he did not plan on going, but would if it means his godchildren would otherwise be turned away.
Menino said ticket checkers will make a judgment call before turning away gift recipients. “We’re not going to be the Gestapo,’’ he said.
But the fact that only about a quarter of the skaters will be registered with the city makes enforcing the Boston-only policy difficult.
“We wouldn’t be able to police for that,’’ Menino’s spokeswoman Dot Joyce said. “That would be an unrealistic expectation. We are not going to be able to enforce everything.’’ "

Restaurant reservations

An interesting paper by Alexei Alexandrov and Martin A. Lariviere asks Are Reservations Recommended?
From the abstract:

"We examine the role of reservations in capacity-constrained services with a focus on restaurants. Although customers value reservations, restaurants typically neither charge for them nor impose penalties for failing to honor them. However, reservations impose costs on firms offering them. We highlight ways in which reservations can increase a firm’s sales by altering customer behavior. First, when demand is uncertain, reservations induce more customers to patronize the restaurant on slow nights. The firm must then trade off higher sales in a soft market with sales lost to no shows on busy nights. Competition makes reservations more attractive as long as enough customers will consider dining at either restaurant. When there are many firms in the market, it is rarely an equilibrium for none to offer reservations. Second, we show that reservations can increase sales by shifting demand from a popular peak period to a less desirable off-peak time. This is accomplished by informing diners when all peak reservations have been given out. "



And from the Introduction:

"Restaurant reservations are a curious phenomenon. Customers value them, but restaurants give them away. Indeed, firms such as Weekend Epicure have stepped in to profit from the resulting arbitrage opportunity. These “scalpers” reserve tables at popular spots under fictitious names that they share with the first paying party. (Fees are on the order of $35 to $40.) What makes offering reservations even more remarkable is that they are costly to provide. Fischer (2005) identifies three costs to offering reservations. These include additional staff needed to take reservations and added complexity from having to balance the needs of walk-in customers with commitments made to reservation holders. The final consideration is no shows.
Customers can generally fail to keep reservations without penalty, but restaurants suffer if they hold capacity for customers that never come. No shows represent a real problem. Bertsimas and Shioda (2003) report a no-show rate of 3% to 15% for the restaurant they studied. More generally, rates of 20% are not unusual (Webb Pressler, 2003) and special occasions such as New Year’s Eve can push rates to 40% (Martin, 2001).
Why then should restaurants offer reservations? One reason is the operational benefits they provide. Reservations regulate the flow of work. By staggering seatings, a restaurateur can assure that waiters are not overwhelmed by a rush of customers followed by the bartender and kitchen being swamped with orders. Reservations thus allow fast service without excessive capacity (Fischer, 2005). Reservations would then be appealing when either customers are delay sensitive or the firm’s costs increase with arrival variability. Further, reservations may allow a restaurant to estimate demand and improve staffing and sourcing decision."

Last minute tickets at sold out Fenway

The Red Sox, whose home games are always sold out, reserve some tickets for last minute purchase: At Sold-Out Fenway, a Way in for Patient Fans .
"For every home contest, whether a weekday game in April or a Game 7 in October, the Red Sox set aside some tickets for fans who did not plan ahead. There may be a few dozen seats available, there may be a few hundred. The point is, they are available, every game, for those who waited too long but are willing to wait a bit longer.
Starting five hours before the scheduled first pitch, fans can line up on the sidewalk near Gate E, around the corner from hectic Yawkey Way. There is a red-and-white sign reading “Game Day Ticket Sales,” and there are a pair of green roll-up doors. Two hours before the game, the doors are raised and tickets are sold at face value. "
...
"“To us, it’s part of a long-term strategy,” said Ron Bumgarner, the team’s vice president for ticketing. “We do not want every fan at Fenway Park to be a season-ticket holder with 81 games. We want as many different people in Red Sox Nation as possible to be able to come to the games.”
Such a system comes with strict rules, and several copies of them are pasted near Gate E. First, five hours is deemed the perfect amount of wait time — too short to spend the night (which used to be allowed, but created the predictable unruliness) but long enough to make it a bit of a chore.
Second, fans must stay in line and cannot save spaces for other fans. In other words, no sitting across the street at the Cask ’n Flagon, or under the center-field stands at the Bleacher Bar, draining beverages while a buddy reserves a spot until the last minute.
Third, once the tickets are purchased — only one per person — fans must enter the ballpark. That means no scalping the ticket to the highest bidder, a temptation for big games."

The secondary ticket industry (scalping, to you)

The "secondary ticket industry" has a trade show, meeting tomorrow in Las Vegas, about which they say: "Ticket Summit is the leading trade show and conference in the secondary ticket industry."

These are the folks who sell tickets on the aftermarket (often after buying them on the primary market before others can), and who are often called by the more familiar, less charitable name of scalpers.

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. The most interesting undergraduate theses are written by students with a real passion for what they are studying, and Christian, 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.

TTE points to two thoughtful essays on scalping. One is by Trent Reznor of the band Nine Inch Nails: TR thoughts on ticket re-sellers / scalping (which also includes some interesting links).
Another is this Slate article by Mark Gimein:
Is Ticket Scalping All That Bad? Miley Cyrus' new crackdown on concert gouging just shows how complex the problem is.

Are paperless tickets scalp proof?

The latest development in the ongoing war between ticket originators, fans, and scalpers is the ticketless ticket.

"Ticketmaster is going to try issuing paperless tickets to reduce scalping. Resale companies are not amused.
http://marketplace.publicradio.org/display/web/2009/06/08/pm_ticketmaster/
"JILL BARSHAY: Miley Cyrus hopes she can cut out scalpers from her next tour by selling only paperless tickets. Ones you can't give or sell to someone else. Ones you buy online and pick up at the concert gate by showing your driver's license and a credit card.
Sean Pate is the spokesman for StubHub, the big ticket resale site, owned by eBay. He's predicting paperless tickets will mean long lines on concert night.
SEAN PATE: You know, we're going to see a lot of inconveniences for the fans, especially of Miley Cyrus's demographic. Her fans more than likely don't own credit cards.
That means mom or dad may have to listen to the concert too. Not to mention how mortifying it is for a 12-year-old to be seen with her parents.
Critics say some concerts will still sell out quickly. And prices will be jacked up. The question is by whom. Don Vaccaro is the CEO of TicketNetwork, another resale site. He points out that Miley Cyrus's management company, which is owned by Ticketmaster, is selling prime seats on its Web site starting tomorrow for $295."

Update: Here's the (June 16, 2009) take of the NY Times Ethicist column: Miley Cyrus Takes on the Scalpers.

HT: Steve Leider