Primary-Market Auctions for Event Tickets: Eliminating the Rents of "Bob the Broker"?

Eric Budish and Aditya Bhave

American Economic Journal: Microeconomics, 2023, vol. 15, issue 1, 142-70

Abstract: Economists have long been puzzled by event-ticket underpricing: underpricing reduces revenue for the performer and encourages socially wasteful rent-seeking by ticket brokers. What about using an auction? This paper studies the introduction of auctions into this market by Ticketmaster in the mid-2000s. By combining primary-market auction data from Ticketmaster with secondary-market resale value data from eBay, we show that Ticketmaster's auctions 'worked': they substantially improved price discovery, roughly doubled performer revenues, and, on average, nearly eliminated the potential arbitrage profits associated with underpriced tickets. We conclude by discussing why, nevertheless, the auctions failed to take off.

JEL-codes: D44 D47 L82 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1257/mic.20180230

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