From Adam Davidson’s recent article in the NY Times about ticket scalping:
Few products are so under-priced that an entire subsidiary industry exists to take advantage of the discrepancy. When there is excess demand for a new car or phone, some people might sell theirs at a markup on eBay, but there’s nobody across the street from the dealership or Best Buy offering it right away for double the sticker price; there certainly isn’t an entire corporation built on exploiting companies’ failure to properly price items initially. Yet concerts and sporting events consistently price their tickets low enough that street scalpers risk jail time to hawk marked-up tickets, and StubHub makes hundreds of millions a year in revenue.
Most concertgoers don’t usually consider ticket prices as incredibly low. After barely keeping up with inflation for decades, concert prices have risen wildly since 1996, or around the time when baby boomers, who helped start the industry, aged into a lot more disposable income. These days, prices can seem incredibly high. Barbra Streisand, who charged more than $1,000 for some. Yet to an economist, the very existence of scalpers and companies like StubHub proves that tickets are far too cheap to balance supply and demand.
MP: As I’ve pointed out many times before, a thriving secondary market for tickets to concerts and sporting events can only exist when: a) tickets are under-priced relative to their true market value, and/or b) tickets are under-supplied (at least for concerts) relative to fan demand. And since artists, promoters, managers and sports venues control ticket price and ticket quantity (at least for concerts), they could easily minimize or eliminate the secondary market pretty easily by raising ticket prices and/or increasing the quantity of concert tickets available for sales (bigger venues, more shows, etc.).