Ep. 61: Market design and live events

Fans have frequently experienced the frustration of event tickets selling out in a matter of minutes and then being resold for twice as much or more. This combination of underpriced tickets in the primary market and rent-seeking speculation in the secondary market has long puzzled economists.  In a paper in the American Economic Journal: Microeconomics, authors Eric Budish and Aditya Bhave show that auctions are an easy way to fix broken ticket markets by looking at changes Ticketmaster made in 2003. However, the benefits of using auctions in primary markets are unlikely to be felt by consumers. Budish says that other reforms, such as preventing resales, could be a way for artists and sports teams to reward their die-hard followers. Budish recently spoke with Tyler Smith about Ticketmaster's efforts to curb secondary markets with auctions, and how reforming the primary market for tickets benefits sellers as well as society.