October 24, 2003

Scalp 'Em!

Andrew explores the economics of ticket scalping laws.

I agree with Andrew that a venue can have an enforceable contract not to re-sell tickets (in legalese, this is a "non transferable license" to enter the venue for the event.)

Disagreed that such contracts are not enforceable by private means. If there are enforcement costs, those can be contracted for. The costs of enforcing all kinds of contracts are provided for. Ever leased an apartment? If they have to hire a lawyer to collect rent from you, guess who's on the hook for those enforcement costs? The renter.

Assuming that the fine print on the back of the ticket is a valid contract (it usually is, and if not, then the whole argument collapses anyway) then there's no reason enforcement costs can't be added as a term of the contract. OK, so maybe you make the ticket a little larger.

And in terms of enforcement, the venues aren't really worried about the low volume of people reselling to friends, but the folks who do so as a business enterprise. (Because that's where the real harm comes in terms of your earlier profit-maximization argument)

Those folks are big targets. Just like the RIAA is primarily going after file-sharers of 1,000 songs or more, venues who wish to make an impact could sue professional scalpers and take the profit out of scalping. That would cure the problem, a lot more quickly than scalping laws.

I suspect the comments on Andrew's site about scalping laws not being the product of a contract enforcement, but out of moral outrage ("if we allow scalpers to resell at market prices, we'll NEVER be able to afford to see the Eagles reunion!"). To the extent that is true, anti-scalping laws are harmful to market forces. Now, if you want to criminalize the contractual violation, that's philosophically different, but it gives preferential treatment to certain types of contracts over other.

Posted by wasylik at October 24, 2003 11:29 AM | TrackBack
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