One of the most transformative impacts of the Internet has been its facilitation of markets. The Internet has made markets more efficient by cutting out middlemen and gatekeepers, by extending the reach of narrow and regional markets, even by facilitating the creation of entirely new markets. One example of a market extended and made more efficient by the Internet is the market for unused tickets.
Ticket holders are sometimes unable to attend an event for which they have purchased tickets. Their options for salvaging the value of their tickets were limited, most often to giving them away or selling them to a friend, or via the local classifieds. But now online secondary markets have helped them unload tickets they can no longer use.
Ticket holders always believed the tickets were theirs to sell or to give away as they saw fit, and the market as it existed validated their assumption—whoever presented the tickets gained admission to the show or game without any hindrance. A recent Penn Schoen Berland Research poll proved it empirically: 90 percent believe they have the right to resell or transfer the tickets in any way they choose—in short, that they own the ticket. And court decisions, going all the way back to a 1906 California Supreme Court decision and up through 2003’s Arlotta v. Bradley Center, have generally agreed that reselling tickets at a profit is neither illegal nor harmful.
Such secondary markets are a significant source of economic activity and efficiency. Securities, automobiles, homes and aircraft are all well entrenched secondary markets, many of them larger than the primary markets.
The economy clearly benefits from both new and used goods changing hands. In every market where there is a willing buyer and seller, economic value is added for both. Society at large also benefits due to the allocative efficiency produced by the transaction. The secondary ticket market has revealed and unlocked the economic value that was trapped in the poor design of the primary ticket market pricing model, and hidden by the lack of an efficient secondary market.
Secondary markets are of particular benefit when public or private market restrictions have distorted a competitive marketplace. A functioning market establishes prices. No functioning market leads only to guess work. Until the appearance of efficient secondary ticket markets, there was no way to broadly determine the value of a ticket beyond the arbitrary price set by the primary seller.
It’s the kind of natural market and self-organization that it is our duty to preserve, if we believe in markets, spontaneous order, self-organization and limited government.