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Ticket touts – a lesson in economics

The other day I was approached by a ticket tout standing in the freezing cold – it was minus ten – as I was walking past a sports event venue. Unusually, the tout was trying to buy tickets rather than sell, but either way the subject raises a lot of emotion and the touts are regarded as a despicable breed. Ticket touting was in the news again today in connection with a forthcoming series of concerts by Michael Jackson, with the reselling of tickets on the internet being referred to.

The anger this arouses is worrying because it reveals a disturbing lack of understanding of basic economics amongst the public at large. The touts are in fact providing a useful service. People can get rid of tickets they can’t or don’t want to use. People who have not been able to get the tickets are able to obtain them. The touts are taking the risk of being left with unsold tickets, the activity is time-consuming and this is a case where the labourer is worthy of his reward. If there is a profit to be made from this activity, it indicates that the promoters of concerts and sports events are disposing of the tickets for less than their market value.

There may be a good reason for this. Perhaps because they prefer to sell off as many tickets as possible as soon as possible, leaving the touts to carry the risk of being left with unsold tickets. This sounds like a normal market mechanism working as markets should, to balance out supply and demand.

In certain sports, tickets are apparently allocated by some kind of quota system, and the existence of a secondary market, for that is what touting is, clearly indicates that the system is not giving people what they want – a ticket for the match that they actually want to see. There is a lot of emotion aroused over football matches because the game, whilst purely a commercial operation which forms part of the mass entertainment industry, has employed clever marketing techniques which trade on strong local loyalties.

Given that the touts provide a service, the reasons for getting rid of them are irrational. In any case, so long as the economic pressure remains, they could not be legislated out of existence, any more than could the so-called economic criminals in Stalin’s Russia.

But to stop the practice, all that is needed is for the events promoters to auction all the tickets themselves. Or could sell them in the same way as as airlines sell their seats, making limited numbers of tickets available at low cost well in advance, and pushing up (or reducing) the prices as the time of the event approaches.

What about things like football matches where the tickets are available at concessionary prices to supporters and so on? All that is necessary to prevent the tickets being sold on is to make them valid only when used in conjunction with some kind of membership or other identity card, in the same way as Students’ Railcards are.

About a year ago, before there were more important things to be concerned about, MPs were calling for action. It is worrying that MPs should even have seen it as something they should be involved in. Nobody is going to starve or be left living on the streets because they cannot get into a pop concert. More disturbing still is that their understanding of fundamental economics is so poor that they could not recognise it is the operation of simple market forces. Which might help to explain why there are bigger things to be dealt with but gives no grounds for confidence in government’s ability to handle them.