Intro to Econ: Fourth Lecture – Rationing and Ticket Scalping

Consider a pop music concert. For reasons that we do not necessarily have to go into, pop music stars do not always want to charge the highest possible (single-concert profit-maximizing) prices for tickets to their concerts. In fact ticket prices are often so “low” (I still find them rather expensive) that many more people would like to go to the concert (at these prices) than there are tickets. The economic term for this is that tickets are being “rationed”. What is the result of such rationing?

If tickets are sold offline in a single “brick-and-mortar”, as people like to say, ticket booth, then we get long queues and people starting to queue at 2am of the morning of the day ticket sales begin or they even get there earlier and camp out with sleeping bags. If the selling is done online, then you have about one second in which you can buy your ticket, with many people with a slower internet connection missing out. Is the final ticket allocation in such cases of rationing Pareto-efficient? Think about it.

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