Scalping For An Answer

Football season is in full-bloom in Gainesville and with it, ticket scalping. The University of Florida football games attract an incredible number of individuals and thus, the demand for these tickets is quite significant. Ticket scalping has been getting much publicity not only in Gainesville but also throughout the state. Scalpers are viewed by the public as greedy individuals who are exploiting consumers by purchasing tickets at one price and then selling those same tickets at a higher price on the street at a profit. The public often calls upon government to solve any problem that might arise but few dwell deeper in an effort to find the root of the problem. The fact of the matter is that the ticket scalper is doing the public a favor. Such a statement may sound absurd but it shall be elaborated in the following paragraphs.

The capitalist free market depends heavily upon the price system. The price of any good is rooted in the supply and demand for that product. Ceteris paribus (latin for “everything else held constant”), the point at which supply and demand equals is called the equilibrium point. At this point all individuals who sought a ticket, received a ticket. If the price of a good is above the equilibrium point then the quantity supplied will exceed the quantity demanded. If the price of a good is below the equilibrium point then the quantity demanded will exceed the quantity supplied.

If an entrepreneur prices their product below the equilibrium price, then they will see inventories empty quickly. If a product is being sold off too quickly and willing buyers are left without the product then this is a market signal for the entrepreneur to set the price higher. If the price is set too high then inventories will be sold off slowly and there are not enough willing buyers. This is a market signal for the entrepreneur to set the price lower. In both cases the entrepreneur does not set the price higher or lower due to benevolence or greed but aiming for a profit. It is the profit and loss mechanism that tells the entrepreneur if a product is priced too high or low.

If there is a unwillingness by the entrepreneur to set the price higher, another individual may choose to speculate and purchase the product at the low price and sell the tickets at a higher price. Speculation is a market process that allows the price to come closer to the equilibrium point and allow those who truly desire the product to receive the product. This is how commodity futures work in equity markets. Now that the basics are covered, we can analyze the problem at hand.

Ticket scalpers are driven by the market profit and loss mechanism to set the ticket price closer to the equilibrium point and allow those who truly want tickets to get them. It is the fault of the ticket sellers, not of the ticket scalpers, that scalping exists. If those who sold tickets were to set prices higher, closer to the market equilibrium point, ticket scalping would be virtually non-existent. When such a proposal is made, many individuals, especially students, yell 'nonsense!' and are disgusted to think that they would have to pay more money in order to attend the football games. If this is the case, then those same individuals should not turn around and complain about the rampant ticket scalping.

Aside from simply complaining, these ticket scalping nay-sayers are crying out for increased policing of streets on and before game days tracking down the scalpers. Such coercion never eliminates markets but simply moves the product into the black markets. This increases the crime and violence associated with ticket scalping and only hurts those consumers who want to go see the game. In addition, when one adult decides to purchase goods from another adult it should not matter at which price or where they are doing this exchange as long as they are not harming the liberties of another. The freedom to engage in market exchanges is what has made the United States economy great and one of the strongest in the world.

In short, the “problem” of ticket scalping is not actually a problem but a solution to a problem. The problem is the fact that football tickets are priced too low. If the ticket sellers were to price the tickets higher, scalping incentives would be greatly diminished. It is also important to understand that it is the right of individuals to engage in exchange, regardless of what others may think of the exchange, as long as the exchange does not harm the livelihood of other individuals. As for those who are crying out against ticket scalping, simply increase prices so that they satisfy the equilibrium point. If these individuals fear increased prices then stop speaking out against a problem whose solution they will are unwilling to accept.