Bardonomics

Figure 1 Following nearly every major sports event and music concert there's an obligatory newspaper piece lamenting the damage done by ticket touts and scalpers. These individuals, it is contended, harm ordinary concertgoers and sports enthusiasts by taking advantage of the limited ticket supply to resell at inordinately high prices. Laws regarding ticket resale vary around the world; in Hong Kong, the government places an outright ban on reselling a ticket at any price above its face value. Although such measures tend to have popular support, they are perhaps economically misguided. Ticket reselling is an activity that allows the market to "clear"—that is, reach an equilibrium between supply and demand. Suppose, as in Figure 1, that the event organiser sets the ticket price at Ps. Then, the intersection between the demand curve and the price occurs at Qd. This intersection represents the quantity of tickets that consumers will demand at the original sale price.