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Primary-Market Auctions for Event Tickets: Eliminating the Rents of "Bob the Broker"?

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  • Eric Budish
  • Aditya Bhave

Abstract

Economists have long been puzzled by event-ticket underpricing: underpricing reduces revenue for the performer and encourages socially wasteful rent-seeking by ticket brokers. What about using an auction? This paper studies the introduction of auctions into this market by Ticketmaster in the mid-2000s. By combining primary-market auction data from Ticketmaster with secondary-market resale value data from eBay, we show that Ticketmaster's auctions 'worked': they substantially improved price discovery, roughly doubled performer revenues, and, on average, nearly eliminated the potential arbitrage profits associated with underpriced tickets. We conclude by discussing why, nevertheless, the auctions failed to take off.

Suggested Citation

  • Eric Budish & Aditya Bhave, 2023. "Primary-Market Auctions for Event Tickets: Eliminating the Rents of "Bob the Broker"?," American Economic Journal: Microeconomics, American Economic Association, vol. 15(1), pages 142-170, February.
    • Handle: RePEc:aea:aejmic:v:15:y:2023:i:1:p:142-70
    DOI: 10.1257/mic.20180230
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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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