Letters | An economically sound way for Hong Kong to beat ticket scalpers
Readers discuss how to make scalping less profitable, fan despair, touting at government venues, and chikungunya fever prevention
One way to contain scalpers is to hold Dutch auctions of concert and sports tickets. In a Dutch or descending price auction, both the ceiling and floor prices could be established at the outset. Bidding starts as the price decreases incrementally over a time period until some bidders accept a certain price. Those offering even lower prices will compete for the remaining tickets, if any.
To increase revenue, the market could be segmented by holding different Dutch auctions for different price categories.
This descending price mechanism exploits consumer surplus, or the difference between the willingness to pay and the actual payment. If a consumer is willing to pay $3,000 for a ticket sold officially at $1,000, the consumer surplus is $2,000. Currently, scalpers cash in on consumer surplus when well-off consumers are willing to pay a lot more.
Dutch auctions could generate more box-office revenue by monetising consumer surplus while dragging out the sale process. This would make scalping less profitable and attractive because a portion of the scalper’s profit is already realised and transferred to the box office.