Ticket scalping : why it is good

In Quebec, the provincial government is attempting to restrain ticket reselling, more commonly known as scalping. In the eyes of the government, scalping deprives consumers of the tickets they so ardently want. However, the regulation of this activity might in fact harm consumers more than it could help them. It may also even reduce the “supply” of cultural, artistic and sporting events. I outlined the reasons why for this in this interview I gave to the Journal de Montréal (french). Here is more complete explanation of my argument :

1. The supply of seats at an event is limited, the demand can be illimited;
2. Evaluating the correct price at which consumers desire their tickets is a tricky task for the organizer of the event. If he charges too high, he won’t be able to fill up his arena, stadium or theater. On the other hand, if he charges too low, he could not cover his costs. Hence, the evaluation of the “correct” price is an arduous and risky task for the organizer;
3. To cover his costs and make a reasonable profit, the organizer will charge a low price that will bring him closest to filling up the room;
4. The risk is hence shifted on scalpers whose sole task is to collect as much information as they can about the extent of demand and then try to make a profits;
5. In this entire process, consumers are the biggest winners since tickets are not allocated on a first-come-first-served basis. Instead, they are allocated on the basis of what consumers are ready to pay. Those who will buy the tickets at the higher price caused by the scarcity of places will be those who value at that price. Hence, arenas, stadiums and colloseums will have less empty seats as was observed when scalping was deregulated for the NHL in seven American states;
6. It also provides consumers with more flexibility about when to buy tickets or about reselling them if they have changes in plans;
7. Without scalping, there are two possible outcomes. The first being a reduction in the “supply” of cultural events since there are more risks for organizers. The second being, if we wish to maintain the supply of cultural events, is to increase subsidies to those events. However, this is costly and less efficient that the aforementionned concept of scalping.

In short, this is the argument in favour of scalping and in favour of letting it continue freely;