an example: open source software produces lots of value. this value is partly captured by consumers who get better software for free, and partly by businesses that make more money than they would otherwise.
the most clear cut case is that some businesses exist purely by wrapping other people’s open source software, doing advertising and selling it for a handsome profit; this makes the analysis simpler, though to be clear the vast majority of cases are not this egregious.
in this situation, the middleman company is in fact creating value (if a software is created in a forest with no one around to use it, does it create any value?) by using advertising to cause people to get value from software. in markets where there are consumers clueless enough to not know about the software otherwise (e.g legacy companies), this probably does actually create a lot of counterfactual value. however, most people would agree that the middleman getting 90% of the created value doesn’t satisfy our intuitive notion of fairness. (open source developers are more often trying to have the end consumers benefit from better software, not for random middlemen to get rich off their efforts)
and if advertising is commoditized, then this problem stops existing (you can’t extract that much value as an advertising middleman if there is an efficient market with 10 other competing middlemen), and so most of the value does actually accrue to the end user.
Often tickets will be sold at prices considerably lower than the equilibrium price and thus ticket scalpers will buy the tickets and then resell for a high price.
That said, I don’t think this typically occurs because the company/group originally selling the tickets wanted consumers to benefit, it seems more likely that this is due to PR reasons (it looks bad to sell really expensive tickets).
This is actually a case where it seems likely that the situation would be better for consumers if the original seller captured the value. (Because buying tickets from random scalpers is annoying.)
I wonder how much of this is the PR reasons, and how much something else… for example, the scalpers cooperating (and sharing a part of their profits) with the companies that sell tickets.
To put it simply, if I sell a ticket for $200, I need to pay a tax for the $200. But if I sell the same ticket for $100 and the scalper re-sells it for $200, then I only need to pay the tax for $100, which might be quite convenient if the scalper… also happens to be me? (More precisely, some of the $100 tickets are sold to genuine 3rd party scalpers, but most of them I sell to myself… but according to my tax reports, all of them were sold to the 3rd party.)
ticket scalping is bad and we should find some sort of fully distributed market mechanism that makes scalping approach impossible without requiring the ticket seller to capture the value. it ought to be possible to gift value to end customers rather than requiring the richest to be the ones who get the benefit, how can that be achieved?
it ought to be possible to gift value to end customers rather than requiring the richest to be the ones who get the benefit, how can that be achieved?
The simple mechanism is:
Charge market prices (auction or just figure out the equilibrium price normally)
Redistribute the income uniformly to some group. Aka UBI.
Of course, you could make the UBI be to (e.g.) Taylor Swift fans in particular, but this is hardly a principled approach to redistribution.
Separately, musicians (and other performers) might want to subsidize tickets for extremely hard core fans because these fans add value to the event (by being enthusiastic). For this, the main difficulty is that it’s hard to cheaply determine if someone is a hard core fan. (In principle, being prepared to buy tickets before they run out could be an OK proxy for this, but it fails in practice, at least for buying tickets online.)
can you give examples?
an example: open source software produces lots of value. this value is partly captured by consumers who get better software for free, and partly by businesses that make more money than they would otherwise.
the most clear cut case is that some businesses exist purely by wrapping other people’s open source software, doing advertising and selling it for a handsome profit; this makes the analysis simpler, though to be clear the vast majority of cases are not this egregious.
in this situation, the middleman company is in fact creating value (if a software is created in a forest with no one around to use it, does it create any value?) by using advertising to cause people to get value from software. in markets where there are consumers clueless enough to not know about the software otherwise (e.g legacy companies), this probably does actually create a lot of counterfactual value. however, most people would agree that the middleman getting 90% of the created value doesn’t satisfy our intuitive notion of fairness. (open source developers are more often trying to have the end consumers benefit from better software, not for random middlemen to get rich off their efforts)
and if advertising is commoditized, then this problem stops existing (you can’t extract that much value as an advertising middleman if there is an efficient market with 10 other competing middlemen), and so most of the value does actually accrue to the end user.
Often tickets will be sold at prices considerably lower than the equilibrium price and thus ticket scalpers will buy the tickets and then resell for a high price.
That said, I don’t think this typically occurs because the company/group originally selling the tickets wanted consumers to benefit, it seems more likely that this is due to PR reasons (it looks bad to sell really expensive tickets).
This is actually a case where it seems likely that the situation would be better for consumers if the original seller captured the value. (Because buying tickets from random scalpers is annoying.)
I wonder how much of this is the PR reasons, and how much something else… for example, the scalpers cooperating (and sharing a part of their profits) with the companies that sell tickets.
To put it simply, if I sell a ticket for $200, I need to pay a tax for the $200. But if I sell the same ticket for $100 and the scalper re-sells it for $200, then I only need to pay the tax for $100, which might be quite convenient if the scalper… also happens to be me? (More precisely, some of the $100 tickets are sold to genuine 3rd party scalpers, but most of them I sell to myself… but according to my tax reports, all of them were sold to the 3rd party.)
ticket scalping is bad and we should find some sort of fully distributed market mechanism that makes scalping approach impossible without requiring the ticket seller to capture the value. it ought to be possible to gift value to end customers rather than requiring the richest to be the ones who get the benefit, how can that be achieved?
The simple mechanism is:
Charge market prices (auction or just figure out the equilibrium price normally)
Redistribute the income uniformly to some group. Aka UBI.
Of course, you could make the UBI be to (e.g.) Taylor Swift fans in particular, but this is hardly a principled approach to redistribution.
Separately, musicians (and other performers) might want to subsidize tickets for extremely hard core fans because these fans add value to the event (by being enthusiastic). For this, the main difficulty is that it’s hard to cheaply determine if someone is a hard core fan. (In principle, being prepared to buy tickets before they run out could be an OK proxy for this, but it fails in practice, at least for buying tickets online.)
More discussion is in this old planet money episode.