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999. The Enigma of Ticket Exchanges (and Other Reselling Markets)

Invited abstract in session TB-50: Retail Operations and Marketing, stream Retail Operations.

Tuesday, 10:30-12:00
Room: M2 (building: 101)

Authors (first author is the speaker)

1. Pnina Feldman

Abstract

It has long been established in the literature and observed in practice that sellers can benefit from allowing consumers to purchase in advance of the date of consumption. Because of this advance purchasing, consumers can find themselves either with a ticket that they no longer want or without a ticket that they wish to have. In the past, scalpers would facilitate transactions among these consumers for a fee. Sellers historically disliked those practices and actively worked to prevent them. We obtain a stark finding: an unfettered and efficient reselling market eliminates all of the benefits of advance selling, which justifies sellers’ historic hostility to reselling. But now ticket exchanges are common, growing, and even embraced by sellers. What changed? We present a theory that demonstrates reselling is actually beneficial for sellers under one crucial condition: the seller must be able to have some control over the reselling process, thereby allowing the seller to earn something from each transaction. The old-fashioned paper ticket did not give such control, but technology now enables electronic tickets, which do. In fact, a seller cannot earn more than what it receives from a properly designed and efficient reselling market (reselling is an optimal mechanism). And such a market eliminates the opportunities for speculators and can also be beneficial to consumers. In sum, our results explain why the view towards reselling has shifted dramatically.

Keywords

Status: accepted

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