AUSTRIAN ECONOMICS ADDICT

Once again it’s time for March Madness. We can learn a lot about how the free market works by walking around arena’s that are hosting games.  Ticket scalpers and ticket buyers are involved in voluntary exchanges which are the heart of a free market. I wrote this post below about ticket scalping last year and I’m going to post it again.

TICKET SCALPING: THE TRUE FREE MARKET IN ACTION

I’m going to the Ohio High School Basketball Tournament this weekend not and not just to watch the games. I like to observe the economic principles at play in the free market for tickets, (aka scalping) that takes place outside of the arena, it is a real education. This video explains whats going on.

Most of the people who participate in the free market of ticket scalping, have no understanding of the economic principles they are demonstrating by their actions. Supply and demand, subjective value, and the allocation of scarce resources through the price system, are just a few of the principles being demonstrated. Order is created out of seeming chaos by buyers and sellers voluntarily making decisions on the price that ultimately leads to an exchange. The scalper is a broker who ultimately brings the buyer and the seller together, in the same way a realtor brings the buyer and seller of a house together. I’ve seen scalpers make a good profit selling tickets when LeBron James was playing in the state tournament because demand was high and the supply of good seats was low. I’ve also been at a final four at the Louisiana Super Dome where scalpers were selling tickets for a dollar, minutes before the game, trying to get what they could before the tickets would became worthless just minutes after the game started. The one thing I’ve noticed in both situations, the buyer and the seller never make the exchange of a ticket, for money, unless both parties agree on the price.  If the same two individuals came together and tried to make the exchange earlier or later than when the exchange actually took place, the subjective valuations of each party would have been different, and an exchange would not have taken place, at that price. If you get a chance to go to an NCAA tournament game, walk around the arena for a while and watch basic economic principles being demonstrated in the secondary ticket market.

This entry was posted on March 20, 2014 at 12:07 am and is filed under Econ. 101. You can subscribe via RSS 2.0 feed to this post's comments.

Tags: Economic Scarcity, March Madness, NCAA Tournament, Price Coordination, Subjective Value, Supply and demand, Voluntary Exchange