Who Does Price Gouging Serve?
Avengers Endgame hits theatres later this month, sparking a mad rush among Marvel fans to secure the best seats for the opening week. The issue of ticket scalping is back in the spotlight again as resale prices of tickets are skyrocketing.
Intuitively, ticket scalping strikes us as insulting and an unethical practice that justifies legislative intervention. But does it?
Unlimited wants, limited supply
Historically, there has been much stigma attached to scalpers and other middlemen since they appear to be reaping massive profits despite not physically creating any goods or services. Nonetheless, they are an essential component of the market as they facilitate the distribution and rationing of scarce resources.
In the United States, those who seek to profit off price gouging in disaster-struck regions through selling essential goods such as power generators and canned food have eased the unfortunately tragedy and saved lives. Sure, people in these regions had to spend more but the key point is that there were essential goods for sale. A low price for items that aren’t available is no price at all.
In the case of movie tickets, every person in town wants to watch Avengers: Endgame and perhaps re-watch it if they could. But the reality of economic scarcity is that there are only so many cinema seats to go around.
We could ration the seats strictly via a random ballot. However, sheer luck would subject even the most enthusiastic Marvel fans to missing out on their tickets. Resorting to a first-come-first-serve basis is only marginally better since booking sites would be plagued with connectivity issues when traffic volume is high.
Ticket scalping within the resale market serves as an economic mechanism that ensures people who value the tickets the most get their seats. Hundreds of dollars for an ordinarily $20 ticket might sound ludicrous to many of us, but guaranteeing a spoiler-free experience might mean the whole world to a hardcore Marvel fan who is willing to spare no expense for it.
If people are flocking to pay $248 (as listed on Sports Hub ticketing website for Ed Sheeran’s upcoming concert) for a three hour long concert ticket, then it is questionable why the reseller price of a $100 ticket for a three hour long film is so unacceptable.
In fact, I argue that we should actually welcome more instead of less ticket scalpers if price is that much of a bone to pick. The presence of other re-sellers would encourage scalpers to price their tickets competitively and offer better seats or more convenient showtimes – a win-win for all of us.
Willing buyers and sellers
Some anti-scalpers concede that some inflation in price is acceptable. But in their view, excessive inflation that takes undue advantage is morally abhorrent . This however begs another question: how do we define ‘excessive inflation’ precisely?
Minister for Trade and Industry, Chan Chun Sing, remarked last February in Parliament that insofar as there are ‘willing buyers and sellers’, we ought not to prescribe profit margins or undertake any legal intervention against scalpers. I stand firmly with the Minister’s stance, as there is simply no other way to determine a fair price other than the market.
In a free market, the value of goods is not objectively preserved in their cost price but determined by consumers who have differing needs and valuation scales, otherwise known as the subjective theory of value. As superficial value of some goods might be, some of us much prefer to order a cup of coffee at Starbucks instead of our neighbourhood coffee shop, or purchasing a Gucci wallet rather than grabbing a cheap purse from a thrift shop.
Some of us can afford to wait to watch Avengers: Endgame much later after its opening, while some of us want to catch it on opening day. We all have different wants and we ought to respect the autonomy and agency of people to negotiate value in the form of prices with one another in a free market.
Perhaps, we might have solutions after all to Thanos’ Malthusian anxieties regarding resource scarcity.