Profiting from Partial Allowance of Ticket Resale

Abstract

For a seller that markets event tickets both in advance and on spot, a concern is that ticket resale may hurt its profitability. The conventional wisdom is for the seller to consider completely banning resale if possible. This article considers an alternative strategy in which resale is only partially restricted; specifically, resale is banned on spot but still allowed in advance. Using a two-period model in which buyers have discreet valuations, the authors show that it is possible for partial resale to outperform no resale (and also unrestricted resale at the other extreme) in terms of seller profitability when the following conditions hold: when the seller has limited capacity, when the number of high-valuation buyers is small enough, and when the number of early arrivers is not too large. An implication of this research is that when consumers conduct advance and spot resale in different channels, such as advance resale online and spot resale offline, the seller may be better off adopting different resale policies for different channels.