Why Promoters Like Scalpers

Abstract:     
If a monopoly supplies a perishable good, such as tickets to a performance, and is unable to price discriminate within a period, the monopoly may benefit from the potential entry of resellers. If the monopoly attempts to intertemporally price discriminate, the equilibrium in the game among buyers is indeterminate when the resellers are not allowed to enter, and the monopoly?s problem is not well defined. An arbitrarily small amount of heterogeneity of information among the buyers leads to a unique equilibrium. We show how the potential entry of resellers alters this equilibrium.

Number of Pages in PDF File: 33

Keywords: price discrimination, scalpers, coordination game, common knowledge

JEL Classification: L12, D42, D45, D82

working papers series