The Welfare Effects of Ticket Resale
We develop an equilibrium model of ticket resale in which buyers' decisions in the primary market, including costly efforts to "arrive early" to buy underpriced tickets, are based on rational expectations of resale market outcomes. We estimate the parameters of the model using a novel dataset that combines transaction data from both the primary and secondary markets for a sample of major rock concerts. Our estimates indicate that while resale improves allocative efficiency, half of the welfare gain from reallocation is offset by increases in costly effort in the arrival game and transaction costs in the resale market.
Thanks to Lanier Benkard, Glenn Ellison, Michael Ostrovsky, and Marc Rysman for valuable suggestions. We are also grateful to Ticketmaster and StubHub for providing data, and to Amitay Alter, Anna Mastri, and Tim Telleen-Lawton for many hours of outstanding research assistance. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.