Ticket Scalping as a Means of Managing Risk

Abstract

Ticket scalping (known as touting in the UK) is often criticised for raising prices to consumers and producing unjustified profits. Conventional economic theory, however, shows that ticket scalping allows tickets to be reallocated in a more optimal manner with regard to the utility of consumers. This article points to an additional benefit from ticket scalping: by providing a secondary market it acts as a potentially powerful tool of risk management for event organisers. It is argued that curtailing ticket scalping may in the long run lead to a decline in the supply of privately provided events and concerts, especially lesser-known ones. This in turn may stimulate a demand for public subsidy.