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Tuesday, August 07, 2007

CADPI sighting on the Wall Street Journal's Op-Ed Page

From the August 7, 2007 WSJ op-ed page:
Let us now praise Eliot Spitzer. Really. The New York Governor recently joined Connecticut Governor Jodi Rell in doing a favor for consumers by signing legislation to legalize ticket "scalping."

These new laws eliminate long-time bans on the resale of tickets for sporting and other entertainment events. This means that fans will now be able to buy and sell tickets in efficient and legal secondary markets. For ardent sports or music fans, this should eliminate the drudgery of camping in line for hours, or sometimes days, outside ticket windows to get choice seats. More than half the state legislatures are considering similar laws.

One explanation for this mood change is that the Internet has made policing antiscalping laws all but futile. Even with these price-cap laws on the books, the secondary ticket market is estimated to be $3 billion a year and growing. E-Bay, Stub Hub, Tickets.com and dozens of others have created a popular marketplace that sets ticket prices to the mutual benefit of buyers and sellers.

Scalping laws were once thought to protect consumers from ticket price gougers. And a handful of self-styled consumer advocates, such as Connecticut Attorney General Richard Blumenthal, still complain that legalizing ticket reselling will inflate prices. They're wrong.

Studies now show that consumers are usually the big winners when the ticket resale market is allowed to operate. Florida recently deregulated its resale market and prices fell because of a greater on-demand inventory of seats. In about 40% of the cases, tickets are resold for less than the face value. A study last year by Craig Depken, an economist at the University of Texas Arlington, found that "cities with anti-scalping laws average per-game season ticket prices $2 greater in baseball and $10 greater in football."

But even when scalpers sell tickets for well above the retail price -- which can occur at sold-out events like a Chicago Cubs game at Wrigley Field this summer -- the higher prices don't mean buyers are getting burned. Having tickets available to those who are willing to pay even a steep price is better than having no tickets available at any price. Secondary markets work efficiently for trading stocks, bonds, housing and art. When an investor resells his share of Google stock for a profit, we don't call him a price gouger. Yet that still happens in many states to ticket scalpers.

Some event sponsors may prefer that their tickets not be resold, and that is their right. That does not mean, however, that government should be obliged to enforce such private preferences. The police have more important things to worry about. Of all people, Mr. Spitzer put it best when he signed the ticket legislation: "Permitting a free market to work its magic is the smart approach." Hold that thought, Governor.

How cool is that? The only mistake is my new affiliation is the University of North Carolina - Charlotte, although the study referenced was written and published while I was at UTA.

Here's a PDF version of the Op-Ed piece

[Update (8/7/2007 3:57EDT) - As requested in the comments section, here is a PDF version of the study cited as it appeared earlier this year in Public Choice. Thanks for the suggestion.]

Do you have a link to the original study by any chance?
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