Economic Development

Scalp Irritation

Laws controlling ticket prices are usually an exercise in futility.
by | July 2007

Football season is here again, which means that thousands of fans will be forced to pay $200 to sit in $55 seats when games sell out. Is ticket scalping a problem that should concern policymakers? Quite a few governments are beginning to think not. They have loosened their regulations in recent months, on the theory that there is little they can--or should--do to prevent the sale of tickets to willing buyers at any price.

"It was asinine to me that in the state of Florida you couldn't sell a ticket for more than a dollar above the face value," says state Senator Mike Bennett, who sponsored a bill to ease the state's World War II-vintage restrictions on ticket reselling. Bennett points out, for example, that it had been legal for people living outside of Florida to buy tickets for Tampa Bay Bucs football games and resell them at a profit. But if a Florida resident tried to do that, he was breaking the law. Out-of-state vendors snapped up tickets to Florida events and then resold them as part of expensive hotel-and-airfare event packages.

The fact that exorbitant markups happen regardless of local restriction demonstrates the futility of anti-scalping laws, says Dan Elfenbein, a Washington University business professor who has studied the issue. Limiting the number of resellers, he argues, only serves to drive prices up even higher. "Some people will be stuck with tickets that they can't use and others will be left without tickets that they want," Elfenbein says.

In any case, it seems like bad public policy to leave laws on the books that are more often flouted than enforced, and that is clearly true of scalping laws. The Internet makes restrictions on ticket sales all but impossible to police. That's why the state of Illinois and the city of Cleveland, for example, have both decided to allow online ticket reselling, believing that established sites such as eBay and StubHub offer buyers some protections against outright fraud. Some consumers will undoubtedly continue to complain about having to fork over three to four times the face value for tickets to a hot game or show. But if they find such pricing unfair, they might consider opting not to buy, rather than depending on public officials to solve the problem for them.


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