represents the creation of inefficiency rather than the remedying of it.
I can't think of a situation where scalpers are not contributing to efficiency. I think you've focussed on intentions of particular parties in the scenarios rather than the net market and that this has taken you to an incorrect conclusion.
With scalpers, the venue venue has their risk removed (they lock in their sales early), and the scalpers increase liquidity by removing the venue's monopoly power over pricing the event. And price discover is better.
Now either the consumers are able to buy the tickets from the scalpers in a competitive market (and often with increased convenience), or the scalper can destroy the tickets and nobody can turn up the the event. They generally won't - that's irrational. Even if they did - it's not an ineficiency for the purpose of the original marketplace. In fact, it creates opportunity for extra production: the venue can arrange a late-entry-for-unfilled-spot policy which allows them to get people in and sell some tickets twice.
Or the venue can detect scalpers and create a dynamic price market of their own and maximise their volumes.
In the situation where multiple scalpers get the tickets and plan to sell them, there has been a massive gain in efficiency. The scalpers have removed the venue's monopoly power over ticket prices and created a second market place which will have more effective price discovery.
Either way, the event provider is focussing on what they're good at, and the scalpers at what they're good at.
Scalping is entreprenerial in spirit and good for the system in practice.
I can't think of a situation where scalpers are not contributing to efficiency.
If scalpers are able to buy out an event in a matter of seconds/minutes after tickets go on sale, they will manage to artificially inflate the price for tickets (since the only way to get tickets will then be to pay the scalpers' prices). In effect, they will have decided that the natural supply/demand situation is unsuitable to them and manipulated the market to create an artificial scarcity. While this is to their own advantage, it is not efficient with respect to the ticket market.
Price discovery is not 'artificial inflation' - it contributes to efficiency.
In effect, they will have decided that the natural
supply/demand situation is unsuitable to them and
manipulated the market to create an artificial scarcity.
No - the situation where artificial scarcity occurs is where people who buy the tickets are prevented from onselling them. In this case the venue has an advantage that contributes to economic inefficiency.
The interests of the ticket maker and the efficiency of the economy are separate considerations.
Even in the situation where one scalper gets all the tickets, if they sell them to people who are themselves then free to onsell them then even this creates a more efficient market than what you have when the venue has a monopoly over the direction of transactions.
I always thought it was strange that event venues were able to coax legislators into introducing anti-scalping legislation. It's only now I see the arguments being brought against scalpers that I appreciate the murkiness of the issue when pitched from certain perspectives.
In this case the venue has an advantage that contributes to economic inefficiency.
The same total sum of goods and services is available with scalpers buying up the supply, but those goods and services are now provided at higher total cost than otherwise. This is, so far as I'm aware, the definition of inefficiency and consists solely of artificial inflation of prices.
OK, thanks. I see that now. In the scenario discussed above in the thread this is the case. This provides an example of where scalpers have a negative effect on the market, something I indicated I couldn't see earlier.
Although this isn't the universal case, because scalpers can compete against the hosue at a later point in the market, and offset attempts by the house to segment the market, and can lose out at times causing sale at a loss to themselves.
The ticket seller might want a specific audience for demographic reasons, and or a sellout crowd for reputation reasons. Scalpers destroy this without giving a kickback to the ticket seller. They also increase the cost to the ticket buyers thus reducing market efficiency.
But that's unrelated to market efficiency. People in this thread are trying to define "seller not getting what they want" or "particular type of consumer not getting what they want" into market inefficiency, and it doesn't work like that.
I'm not an economist. Perhaps I'm wrong, but in this case please make the case in terms of a definition you can cite.
(In practical terms, they seller could reach that aim by giving people a cashback at a random time during the event for those who turned up - for example swapping a single ticket for a cashback at the end of the show as people were leaving the gates. The reason venues don't like scalpers is that they don't like price discovery because of reasons like these: (1) they want to be able to make a killing on late tickets, even if it's only for a few events per year and (2) they want to be able to sell tickets to poor people through some mechanisms at one price, and tickets to richer people through different mechanisms at another price, such as through coupon clipping or discount books or through ticket offices in poor areas, (3) they don't want tickets won through competitions being given away. That way they get to charge wealthier people a higher price than time-rich people who are typically poorer. That's inefficiency.)
Transactions can involve more than just a single flow of cash in exchange for stuff. Economists can and do look at satisfaction as part of market efficiency which explains why people pay for status symbols. Someone buying a diamond for above resale price is not necessarily simply wasting money for zero gain.
PS: Consider rather than a ticket scalper you had a group of bandits charging a toll to cross a bridge. They are not adding value to the experience of crossing a bridge and they are not helping the people who made the bride. So while arguably they increase GDP it's not a net gain for society.
The bridge crossing example doesn't contain a factor equivalent to the risk that the scalpers take on when they buy the tickets, or the fee they pay to the people running the event.
With scalpers, the venue venue has their risk removed (they lock in their sales early), and the scalpers increase liquidity by removing the venue's monopoly power over pricing the event. And price discover is better.
Now either the consumers are able to buy the tickets from the scalpers in a competitive market (and often with increased convenience), or the scalper can destroy the tickets and nobody can turn up the the event. They generally won't - that's irrational. Even if they did - it's not an ineficiency for the purpose of the original marketplace. In fact, it creates opportunity for extra production: the venue can arrange a late-entry-for-unfilled-spot policy which allows them to get people in and sell some tickets twice.
Or the venue can detect scalpers and create a dynamic price market of their own and maximise their volumes.
In the situation where multiple scalpers get the tickets and plan to sell them, there has been a massive gain in efficiency. The scalpers have removed the venue's monopoly power over ticket prices and created a second market place which will have more effective price discovery.
Either way, the event provider is focussing on what they're good at, and the scalpers at what they're good at.
Scalping is entreprenerial in spirit and good for the system in practice.