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The Welfare Effects of Ticket Resale

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  • Phillip Leslie
  • Alan Sorensen

Abstract

We develop an equilibrium model of ticket resale in which buyers' decisions in the primary market, including costly efforts to "arrive early" to buy underpriced tickets, are based on rational expectations of resale market outcomes. We estimate the parameters of the model using a novel dataset that combines transaction data from both the primary and secondary markets for a sample of major rock concerts. Our estimates indicate that while resale improves allocative efficiency, half of the welfare gain from reallocation is offset by increases in costly effort in the arrival game and transaction costs in the resale market.

Suggested Citation

  • Phillip Leslie & Alan Sorensen, 2009. "The Welfare Effects of Ticket Resale," NBER Working Papers 15476, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:15476
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    Cited by:

    1. Courty, Pascal, 2011. "Unpriced quality," Economics Letters, Elsevier, vol. 111(1), pages 13-15, April.
    2. Drayer, Joris & Rascher, Daniel A. & McEvoy, Chad D., 2012. "An examination of underlying consumer demand and sport pricing using secondary market data," Sport Management Review, Elsevier, vol. 15(4), pages 448-460.
    3. Eckard, E. Woodrow & Smith, Marlene A., 2013. "The impact of price discrimination on consumer surplus at popular music concerts," Economics Letters, Elsevier, vol. 118(1), pages 222-224.
    4. Ken Sanford & Frank Scott, 2014. "What Are SEC Football Tickets Worth? Evidence from Secondary Market Transactions," Southern Economic Journal, John Wiley & Sons, vol. 81(1), pages 23-55, July.
    5. Pascal Courty & Mario Pagliero, 2009. "Price Discrimination in the Concert Industry," Economics Working Papers ECO2009/05, European University Institute.
    6. Vlad Radoias, 2017. "When Price Discrimination Fails – A Principal Agent Problem with Social Influence," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 38(2), pages 212-221, March.
    7. Michael Rushton, 2011. "Pricing the Arts," Chapters, in: Ruth Towse (ed.), A Handbook of Cultural Economics, Second Edition, chapter 49, Edward Elgar Publishing.
    8. Sá Nelson & Turkay Evsen, 2013. "Ticket Pricing and Scalping: A Game Theoretical Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 13(2), pages 627-653, September.
    9. Chenghuan Sean Chu & Phillip Leslie & Alan Sorensen, 2011. "Bundle-Size Pricing as an Approximation to Mixed Bundling," American Economic Review, American Economic Association, vol. 101(1), pages 263-303, February.
    10. Courty, Pascal & Pagliero, Mario, 2012. "The Pricing of Art and the Art of Pricing: Pricing Styles in the Concert Industry," CEPR Discussion Papers 8967, C.E.P.R. Discussion Papers.

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    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L0 - Industrial Organization - - General

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