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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," The Review of Economic Studies, Review of Economic Studies Ltd, 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. Hayri A. Arslan & Necati Tereyağoğlu & Övünç Yılmaz, 2023. "Scoring a Touchdown with Variable Pricing: Evidence from a Quasi-Experiment in the NFL Ticket Markets," Management Science, INFORMS, vol. 69(8), pages 4435-4456, August.
    2. Waterson, Michael, 2023. "Platforms as arbitrageurs and facilitators of arbitrage- a simple analysis," The Warwick Economics Research Paper Series (TWERPS) 1481, University of Warwick, Department of Economics.
    3. Caio Waisman, 2021. "Selling mechanisms for perishable goods: An empirical analysis of an online resale market for event tickets," Quantitative Marketing and Economics (QME), Springer, vol. 19(2), pages 127-178, June.
    4. Rustamdjan Hakimov & C.-Philipp Heller & Dorothea Kübler & Morimitsu Kurino, 2021. "How to Avoid Black Markets for Appointments with Online Booking Systems," American Economic Review, American Economic Association, vol. 111(7), pages 2127-2151, July.
    5. Michael Lewis & Yanwen Wang & Chunhua Wu, 2019. "Season Ticket Buyer Value and Secondary Market Options," Marketing Science, INFORMS, vol. 38(6), pages 973-993, November.
    6. 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.
    7. Yao Cui & Izak Duenyas & Özge Şahin, 2014. "Should Event Organizers Prevent Resale of Tickets?," Management Science, INFORMS, vol. 60(9), pages 2160-2179, September.
    8. Alessandro Gavazza, 2016. "An Empirical Equilibrium Model of a Decentralized Asset Market," Econometrica, Econometric Society, vol. 84, pages 1755-1798, September.
    9. Andrew Sweeting, 2015. "A Model of Non-Stationary Dynamic Price Competition with an Application to Platform Design," Working Papers 15-03, NET Institute.
    10. Samuel Cameron & Hendrik Sonnabend, 2020. "PricThe musical tribute band is a neglected topic in the field of economics. At first sight, it may seem to be a simple case of general copycatting which has been covered for other products and market," Economics Bulletin, AccessEcon, vol. 40(2), pages 890-900.
    11. Gesche, Tobias, 2018. "Reference Price Shifts and Customer Antagonism: Evidence from Reviews for Online Auctions," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181650, Verein für Socialpolitik / German Economic Association.
    12. 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.
    13. Pascal Courty & Luke Davey, 2020. "The Impact of Variable Pricing, Dynamic Pricing, and Sponsored Secondary Markets in Major League Baseball," Journal of Sports Economics, , vol. 21(2), pages 115-138, February.
    14. 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.
    15. 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.
    16. Övünç Yılmaz & Rob F. Easley & Mark E. Ferguson, 2023. "The future of sports ticketing: Technologies, data, and new strategies," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 22(3), pages 219-230, June.
    17. 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.
    18. Nikhil Agarwal & Eric Budish, 2021. "Market Design," NBER Working Papers 29367, National Bureau of Economic Research, Inc.
    19. 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.

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