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Resale and Rent-Seeking: An Application to Ticket Markets

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  • Phillip Leslie
  • Alan Sorensen

Abstract

We estimate an equilibrium model of ticket resale in which consumers' and brokers' decisions in the primary market reflect rational expectations about the resale market. Estimation is based on a unique dataset that merges transaction details from both the primary and secondary markets for tickets to major rock concerts. In our model, the presence of a resale market permits tickets to be traded from low-value to high-value consumers, but it also stimulates costly efforts by consumers and brokers to obtain underpriced tickets in the primary market. We estimate that observed levels of resale increase allocative efficiency by 5% on average, but that a third of this increase is offset by increases in costly rent-seeking in the primary market and transaction costs in the resale market. Copyright 2014, Oxford University Press.

Suggested Citation

  • Phillip Leslie & Alan Sorensen, 2014. "Resale and Rent-Seeking: An Application to Ticket Markets," Review of Economic Studies, Oxford University Press, vol. 81(1), pages 266-300.
  • Handle: RePEc:oup:restud:v:81:y:2014:i:1:p:266-300
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    File URL: http://hdl.handle.net/10.1093/restud/rdt033
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    Cited by:

    1. Cho, Daegon & Smith, Michael D. & Telang, Rahul, 2017. "An empirical analysis of the frequency and location of concerts in the digital age," Information Economics and Policy, Elsevier, vol. 40(C), pages 41-47.
    2. Pascal Courty, 2019. "Ticket resale, bots, and the fair price ticketing curse," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 43(3), pages 345-363, September.
    3. Pascal Courty & Javad Nasiry, 2018. "Loss aversion and the uniform pricing puzzle for media and entertainment products," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 66(1), pages 105-140, July.
    4. Marie Connolly & Jérôme Dupras & Charles Séguin, 2016. "An economic perspective on rock concerts and climate change: Should carbon offsets compensating emissions be included in the ticket price?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 40(1), pages 101-126, February.
    5. Gesche, Tobias, 2018. "Reference Price Shifts and Customer Antagonism: Evidence from Reviews for Online Auctions," Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181650, Verein für Socialpolitik / German Economic Association.
    6. Courty, Pascal & Nasiry, Javad, 2015. "Loss Aversion and the Uniform Pricing Puzzle for Vertically Differentiated Products," CEPR Discussion Papers 10523, C.E.P.R. Discussion Papers.
    7. Yoshimoto, Hisayuki & Nakabayashi, Jun, 2019. "Search and resale frictions in a two-sided online platform: A case of multi-use assets," Journal of Economic Behavior & Organization, Elsevier, vol. 162(C), pages 85-105.

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