Rock Concert Pricing and Anti-Scalping Laws: Selling to an Input
13 Pages Posted: 28 Sep 2005
Date Written: September 2005
This paper develops a model that jointly explains excess demand for performance events and the presence of anti-scalping laws. The explanation is based on the fact that the buyers of tickets are also an important input into the performance experience. The use of line-ups as a screening mechanism (leading to apparent under-pricing of tickets) can be profit maximizing if the input quality of a given buyer and her willingness to pay for tickets are not sufficiently positively correlated. Such a mechanism is not possible, however, if the resale of tickets above the posted price is permitted. Since resale amounts to input substitution, banning such resale is therefore efficiency enhancing.
Keywords: equilibrium excess demand, pricing
JEL Classification: D45, K20
Suggested Citation: Suggested Citation