Why Promoters Like Scalpers
33 Pages Posted: 6 Feb 2001
Date Written: October 25, 2000
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.
Keywords: price discrimination, scalpers, coordination game, common knowledge
JEL Classification: L12, D42, D45, D82
Suggested Citation: Suggested Citation