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When Promoters Like Scalpers

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  • Larry Karp
  • Jeffrey M. Perloff

Abstract

If a monopoly supplies a perishable good, such as tickets to a performance, and is unable to price discriminate within a period, the monopoly may benefit from the potential entry of resellers. If the monopoly attempts to intertemporally price discriminate, the equilibrium in the game among buyers is indeterminate when the resellers are not allowed to enter, and the monopoly's problem is not well defined. An arbitrarily small amount of heterogeneity of information among the buyers leads to a unique equilibrium. We show how the potential entry of resellers alters this equilibrium. The moment a performance begins, that seat is dead … . It's like fruit. It's perishable. — Jeffrey Seller, producer of Rent. New York Times, July 20, 2003.

Suggested Citation

  • Larry Karp & Jeffrey M. Perloff, 2005. "When Promoters Like Scalpers," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(2), pages 477-508, June.
    • Handle: RePEc:bla:jemstr:v:14:y:2005:i:2:p:477-508
    DOI: 10.1111/j.1530-9134.2005.00049.x
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    Cited by:

    1. Andrew Sweeting, 2008. "Equilibrium Price Dynamics in Perishable Goods Markets: The Case of Secondary Markets for Major League Baseball Tickets," NBER Working Papers 14505, National Bureau of Economic Research, Inc.
    2. Luyi Yang & Zhongbin Wang & Shiliang Cui, 2021. "A Model of Queue Scalping," Management Science, INFORMS, vol. 67(11), pages 6803-6821, November.
    3. Joris Drayer & Daniel A. Rascher & Chad D. McEvoy, 2012. "An examination of underlying consumer demand and sport pricing using secondary market data," Sport Management Review, Taylor & Francis Journals, vol. 15(4), pages 448-460, October.
    4. Zhou, Yu & Gao, Xiang & Luo, Suyuan & Xiong, Yu & Ye, Niangyue, 2022. "Anti-Counterfeiting in a retail Platform: A Game-Theoretic approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 165(C).
    5. Xuanming Su, 2010. "Optimal Pricing with Speculators and Strategic Consumers," Management Science, INFORMS, vol. 56(1), pages 25-40, January.
    6. Karp, Larry S., "undated". "Correct (and misleading) arguments for using market based pollution control policies," CUDARE Working Papers 42868, University of California, Berkeley, Department of Agricultural and Resource Economics.
    7. Wang, Peng & Ghosh, Bikram & Liu, Yong, 2025. "Winning seats: Contingency selling in markets with limited capacity and diverse preferences," International Journal of Research in Marketing, Elsevier, vol. 42(2), pages 433-449.
    8. Dmitri Kuksov & Chenxi Liao, 2023. "Restricting Speculative Reselling: When “How Much” Is the Question," Marketing Science, INFORMS, vol. 42(2), pages 377-400, March.
    9. Phillip Leslie & Alan Sorensen, 2009. "The Welfare Effects of Ticket Resale," NBER Working Papers 15476, National Bureau of Economic Research, Inc.
    10. Craig Depken, 2007. "Another look at anti-scalping laws: Theory and evidence," Public Choice, Springer, vol. 130(1), pages 55-77, January.
    11. Liang, Xiaoying & Xie, Lei & Yan, Houmin, 2012. "Bertrand competition with intermediation," Economics Letters, Elsevier, vol. 116(1), pages 112-114.
    12. Andrew Sweeting, 2012. "Dynamic Pricing Behavior in Perishable Goods Markets: Evidence from Secondary Markets for Major League Baseball Tickets," Journal of Political Economy, University of Chicago Press, vol. 120(6), pages 1133-1172.
    13. Yao Cui & Izak Duenyas & Özge Şahin, 2014. "Should Event Organizers Prevent Resale of Tickets?," Management Science, INFORMS, vol. 60(9), pages 2160-2179, September.

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