Live Ignorance 8...Thousand

The very fact that people are willing to buy event tickets on eBay from a re-seller indicates that the tickets are obviously worth more to them than the value of the sale price. This is a very basic economic concept to grasp, but somehow it has eluded Bob Geldof. More than 100 pairs of Live 8 tickets are for auction on eBay, and bids are as high as £1,000. Geldof's comment was "I am sick with this. It is a disgrace. It is completely against the interests of the poor. The people who are selling these tickets on websites are miserable wretches who are capitalising on people's misery."

That is completely ridiculous. How is reselling tickets against the interests of the poor? Maybe ticket prices should have been higher, since people are obviously willing to pay lots of money. I can't see how anybody in the transaction is "capitalising on people's misery," though maybe being in the Boomtown Rats gives someone special powers.

If people (Bob Geldof included) were really interested in helping the poor, maybe they'd be less hostile to putting plants and factories in Third World countries and more hostile to agricultural subsidies in rich countries.


Note: I found this story while going to Radio Telefís Éireann to stream LyricFM. I recommend it highly.


Update: Follow-ups here and here.

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The view described above is

The view described above is the standard way for economists to analyse ticket scalping. But think about this situation - suppose you organised a small scale charity event, perhaps a local concert. You don't intend to make money from it. However, someone turns up at the concert and videos it, and becomes a millionaire in reselling the videos. This clearly does not reduce the money raised by the charity. But is completely crazy to think that there might exist a moral obligation on the intermediary to give at least some of the profit he makes to charity? I think that there is something to be said for the moral principle that, if you profiteer on the back of a charitable event, you are under a moral obligation to give some of the profit to charity. But the point is that we are already in philosophical territory here; economic analysis alone cannot help us to answer whether such moral obligations exist.

Ok, so the scalpers aren't exploiting the poor, as Geldof says. But there is a more substantial ethical point here which I think you've missed.

Agri-Subsidies It has become

Agri-Subsidies
It has become conventional libertarian wisdom that among all the other anti-market policies that are stunting growth in the world's poor countries, agricultural subsidies in first world nations may be one of the baddest actors. You can find this argu...

people make use of

people make use of technology and skill to gain control of tickets and force the concert to “sell out” long before it actually should. Then they take advantage of the artificially short supply to charge monopoly-like prices.

That is just a sign that the ticket prices are set too low. If ticket prices were set at a profit-maximizing level, there would be no room for arbitrage and scalpers would be out of business.

And its a misuse of the word to call this monopoly pricing. The scalpers are not restricting output; they are merely capturing what would have otherwise been part of the producer surplus had the tickets been priced correctly. Though, in a sense, all products can be defined as monopolies if you remove enough levels of abstraction. After all, there is only one concert of band X on night Y at location Z. But if we broaden the level of abstraction, there are many substitutes. Still, use of the word monopoly implies market failure, and yet the socially optimum price is the price that scalpers approach.

There’s also a problem of fairness to this. Take a band like Radiohead, that is certainly appealing enough to sell out a venue even if the tickets were raised to Eagles-level prices- why wouldn’t they sell them for this? Because it does exclude their less-wealthy fans which to me (and I’m sure to them) seems unfair- a college student may love radiohead more than the 30 year old mortgage CEO who wants to see and be seen at someplace “hip” but they’re unable to see them because the opportunity cost is higher.

That may be true, but its certainly not the fault of the scalpers. Whenever some people want a scarce resource more than others and have the means of getting it, it will be difficult if not impossible to prevent them from doing so. Setting up a first-come-first-serve line, for instance, may at first shift the scarce resource from money to time; i.e. those with lots of free time, such as college students, will have an advantage at waiting in line for many hours. Yet money can be traded for time, and we then would see these college students selling the tickets they waiting many hours to get. I don't see this as an issue of fairness anyway. If less wealthy fans really want it, they can save up for it.

Price discrimination may also help with the fairness issue: charge much more for front row seats and much less for nose bleed seats.

I think you're missing

I think you're missing what's often at issue- people make use of technology and skill to gain control of tickets and force the concert to "sell out" long before it actually should. Then they take advantage of the artificially short supply to charge monopoly-like prices.

There's also a problem of fairness to this. Take a band like Radiohead, that is certainly appealing enough to sell out a venue even if the tickets were raised to Eagles-level prices- why wouldn't they sell them for this? Because it does exclude their less-wealthy fans which to me (and I'm sure to them) seems unfair- a college student may love radiohead more than the 30 year old mortgage CEO who wants to see and be seen at someplace "hip" but they're unable to see them because the opportunity cost is higher.

-Matt

Live 8 Tickets, IPOs, and

Live 8 Tickets, IPOs, and Dutch Auctions (oh my!)
Q: What do Live 8 tickets and IPOs (Initial Public Offerings) have in common?

A: They're both underpriced and sell in the aftermarket for a higher price than they did initially.

The IPO underpricing phenomenon has around for many years. For the...

I think it's just confusion

I think it's just confusion on Geldof's part - perhaps he thinks that "a concert for the benefit of the poor" means that it will be the poor themselves attending the concerts, and not the better-off folks who want to give their money to the poor*... :dizzy: It's a built-in hazard of delegation, unfortunately.

*(though, of course, they wind up doing no such thing, thanks to the magic of military dictatorships)

CONCERT TICKET SALES EXPLOIT

CONCERT TICKET SALES EXPLOIT POVERTY?
Lynne Kiesling OK, so 'splain me this: when is selling tickets on eBay that you've purchased for a popular concert "profiteering from misery"? When it's a charity concert organized by the befuddled anti-capitalist Bob Geldof. Bob Geldof is a good...

Electronic pimps and

Electronic pimps and under-pricing
Bob Geldof is, rightly, being slated for his ignorant attack on ticket touts. All this, though, raises a question: why do pop bands and sporting venues consistently under-price tickets and so allow such profiteering? I reckon there are two main

Of course willingness to pay

Of course willingness to pay matters. Suppose I value the ticket at $100 and you value it at $25. The seller sets the price at $50. If the tickets are sold on a first come first serve basis, and you purchase the last ticket instead of me, then there is a net social loss of $50 in utility.
while what you write is clearly true, the more important factor is what it means to value something "$25" vs. "$100". Such valuation will clearly be rooted in opportunity cost and income, and such is not an accurate reflection of "social welfare." If you're a millionaire and I'm a pauper my $25 valuation could mean 1000 times more than your $100 valuation, in terms of actual social utility.

I thought the charity here was from the proceeds of the concert, and not the concert itself. Unless the ticket sellers are going to means-test potential ticket buyers, there is no way they can price discriminate and weed out rich people who don’t deserve charity.

it's also charitable to sell a ticket for below what it could fetch in order to allow your more impoverished fans to attend the concert. I think it's fair to view this as charitable giving, and scalping then as someone attempting to take advantage, much like someone who'd try to aquire "toys for tots" in order to resell the toys on ebay. You might argue that giving the toys to poor children is an error because the toys could fetch a higher price on the market, but that completely misses the point.

This is actually confirming my general suspicious about libertarians' treatment of charity. Often, charity seems a convenient excuse ("of course charitable giving would be encouraged in a Lib. society") but in practice you prefer pure profiteering.

And why should “we” make attempts to stop scalpers? Why should the general taxpayer be forced to pay for police services so that the ticket seller can get a free ride to pursue his objective? If the ticket seller wants to pay the cost of price discriminating, by either hiring private security guards to police scalpers, means test customers, or through some other mechanism, great. If not, too bad.
Arguing whther it should funded through taxation is a bug can of worms. If I argue this, your going to start talking about how taxes are a gun pointed at people's heads and so forth. Fortunately it doesn't weigh heavily on the discussion.

We want to allocate resources to the people who value them the most. Willingness to pay is a rough proxy. If I am a passionate music fan, I would be willing to spend a lot on the ticket. You might be an occasional dabbler, who doesn’t really like the music that much, but is willing to pay a low price for a night on the town.
I disagree with this. As long as we're not giving away the tickets for free, we're still measuring "willingness to pay."

If the tickets are priced too low, as you suggest they should be, then there is no reason to think the tickets will be allocated to their most valued use (the passionate fans) as opposed to their least valued use (the people just looking for a cheap activity).
but even if the price is higher, there's no reason to assume that allocation because of opportunity costs. Something else we should consider is why exactly a band tours. In part it's to reward their fans, but it's also about exposure. A person may go see radiohead if they haven't heard them, supposing that the ticket prices are low enough (much like a free sample of Tide or something.) If they get exposed to radiohead and then pick up Ok Computer, then you can guarantee that we're improving social welfare.

But the entire purpose of middle man arbitrage is to make things more efficient - i.e. to reallocate resources to their most valued uses. That’s what stock traders do, and that’s what scalpers do.
not if the prices aren't low because of inefficiency, but instead because of charity and different values.

You can’t just wish away the fact that people who have a strong preference for tickets will find a way around whatever rules you wish to impose, and will end up purchasing tickets through people who do not have as strong a preference for tickets, who we generally call scalpers.
and that's fine- someone can purchase two tickets and sell them. I'm talking about a system in which tickets are bought up quickly by scalpers (using technology) and then sold at a higher price. You are rhetorically playing off the image of one man with one ticket changing his mind about the show, when we're actually dealingwith people who just try and make a living ensuring that ticket prices are artificially high.

-Matt

Dominic, It may not be

Dominic,

It may not be completely crazy to think that a moral obligation might exist in your scenario, but it's not completely rational, either. Could you flesh that out a little bit?

As I’ve argued, changes in

As I’ve argued, changes in price affect income distribution and create different market “equilibria"- the Eagles concert will sell-out filled with cell-phone toting hotshots if the tickets are expensive enough. It’ll sell out with a significantly different demographic if prices are lower. There’s no economic reason to prefer one over the other.

There certainly is an economic reason to prefer one over the other; people's willingness to pay is a good measure of the amount of utility they enjoy. Distributing tickets through a first come, first serve method is highly unlikely to allocate resources to their most valued uses. And when we factor in the ex post redistribution that occurs through things like scalping and ebay sales, we must also consider the additional transaction costs of not having a rational pricing scheme in the first place.

"Whenever some people want a scarce resource more than others and have the means of getting it, it will be difficult if not impossible to prevent them from doing so."
this is descriptive when we’re talking prescriptive and I think you’re rather wrong anyway.

But the facts of the matter are important when determining the way things should be. This same problem occurs in the drug war: there are willing buyers and willing sellers, and any attempt to interfere with that process will be met with strong opposition. Stopping mutually beneficial trade is difficult, costly, and creates perverse incentives and unintended consequences. Which is one reason why anarcho-socialism would never work without some fundamental change in human nature.

Brian- There is every

Brian-
There is every economic reason to favor one demographic over another, if one demographic will give you more money. As Patri pointed out in the past, the point of any economic endeavor is to bring in money and survive. Those that do the former usually succeed in the latter.

Please actually make an argument here. You are implying that someone shouldn't sell something for less than they can because it might not allow them to "survive"? Please point out who's starving in the Radiohead example. Nevertheless, it's a remarkably extreme view to hold that profiteering is actually preferable to charity in some deep way.

Secondly, I don’t buy your argument about a change in price changing “income distribution” (these are two logically separate concepts that are a non-sequitur in this case), but I also don’t believe that static equilibrium analysis of any kind is worth the paper its printed on or the electrons that make it glow on a screen either, so my refusal to buy isn’t saying too much.

I'd prefer it if you'd simply ask for clarification rather than accuse me of logical fallacies. What I was getting at was pricing affecting "Engel's Curves" for a particular good. As someone pointed out on here before, IZOD lowered their prices and actually lost sales. It's easy to see how such price changes could have unpredictable effects on supply and demand, as high ticket prices could bring in larger quanities of money but then erode the larger fanbase that provides a band with support. Or conversely, raising ticket prices increases demand by making the event a rich-person social gathering that it becomes "all the rage to go to."

I should point out that I'm hardly endorsing static analysis; you're correct in thinking that it's complete garbage. I believe that a thorough analysis of all the ideas and concepts which are based on such analysis could be incredibly revealing and perhaps contrary to some of your deepest beliefs however, if you've not already conducted one.

Because it does exclude

Because it does exclude their less-wealthy fans which to me (and I’m sure to them) seems unfair- a college student may love radiohead more than the 30 year old mortgage CEO who wants to see and be seen at someplace “hip” but they’re unable to see them because the opportunity cost is higher.

Why is that unfair? There's a very clear argument to be made for why the CEO has a better claim to the tickets than the college student: he's worked hard at fulfilling the desires of others in order to earn his money, and now he's willing to spend a lot of that money to see a concert. What's the point of working hard to earn extra money if you can't use it to make your life more enjoyable?

So what's the argument for why the student has a better claim to the tickets? He likes the band better? That doesn't strike me as either relevant or measurable. And let's say that your cynical (and rather bizarre) claim about the CEO's motives is incorrect---what if they both like the band equally? If tickets are allocated on the basis of how long someone's willing to wait in line, then the student gets them, because the CEO has work to do.

Is it fair that the CEO should miss out precisely because he's a productive member of society? The idea that we should allocate scarce resources on the basis of how much leisure time someone has is completely backwards. If you work hard to make others happy, then you deserve to have others work hard to make you happy.

Besides, the alleged goal of this particular concert is not to make fans happy; it's to help the poor. And that goal would have been served far better by selling the tickets in a Dutch auction and donating the proceeds to charity.

The tickets to Live8 were

The tickets to Live8 were issued on a clearly non transferable basis. The concert is a private affair and the organisers can invite whoever they want and exclude whoever they want. Clearly they want only to invite those who won on the original text lottery, that is their choice and right, for whatever reason. These invitees can either accept or decline, they cannot resell their invitations anymore than someone can resell an invitation to a private dinner party without the hosts consent. In selling these invitations they are selling something they quite clearly do not have legitimate title to and are therefore committing fraud pure and simple.

Matt27 - There is every

Matt27 -

There is every economic reason to favor one demographic over another, if one demographic will give you more money. As Patri pointed out in the past, the point of any economic endeavor is to bring in money and survive. Those that do the former usually succeed in the latter.

Secondly, I don't buy your argument about a change in price changing "income distribution" (these are two logically separate concepts that are a non-sequitur in this case), but I also don't believe that static equilibrium analysis of any kind is worth the paper its printed on or the electrons that make it glow on a screen either, so my refusal to buy isn't saying too much.

Thirdly, rationing happens one way or the other when there is a problem of scarcity of any kind. Eliminating price as a means of rationing means you simply move to sociopolitical means, such as status-based rationing, or time-based (whose willing to stand in line longer, etc). THree guesses as to which social class will be *more* advantaged in a non-price rationing scheme, the first two don't count. CEOs (and the rich/powerful in general) have more clout that the little guy. Absent pricing, they're probably more screwed (or more dependent upon the beneficence of some bigwig, which brings us back to square one).

The typical defense,

The typical defense, proferred by Marshall, I believe, is not that willingness to pay is a perfect proxy for utility. That is of course false. But rather, that it is the best proxy we have.

I disagree. Willingness to pay money isn't really a very accurate proxy for utility. Willingness to spend time is probably a more accurate one. The obvious problem with allocating resources on this basis is that it's terribly wasteful. If I pay you $100, there's no net loss. But if I "buy" something from you by waiting in line for five hours, there's a net loss of five hours.

But all that's beside the point. Resources shouldn't be allocated so as to maximize short-term utility. First, it's not fair, because utility has nothing to do with desert. Those who've produced more in the past deserve to get first dibs. Aside from questions of fairness, allocating resources on the basis of utility would destroy any incentive to engage in productive activity, which would ultimately have a devastating effect on long-term utility for everyone.

This is just income redistribution through the back door. Since the left lost the debate on drastic income redistribution, the new tactic is to argue that people who have more money shouldn't be able to use it to buy more or nicer things than anyone else.

The typical defense,

The typical defense, proferred by Marshall, I believe, is not that willingness to pay is a perfect proxy for utility. That is of course false. But rather, that it is the best proxy we have.

Micha- That is just a

Micha-

That is just a sign that the ticket prices are set too low. If ticket prices were set at a profit-maximizing level, there would be no room for arbitrage and scalpers would be out of business.
behind this argument lies the assumption of a market induced equilibrium which we're discussing on another thread. As I've argued, changes in price affect income distribution and create different market "equilibria"- the Eagles concert will sell-out filled with cell-phone toting hotshots if the tickets are expensive enough. It'll sell out with a significantly different demographic if prices are lower. There's no economic reason to prefer one over the other. Which brings me to my point about fairness below.

That may be true, but its certainly not the fault of the scalpers.
well I'm not out to hang the scalpers I'm out to make scalping more difficult (via technological barriers.)

Whenever some people want a scarce resource more than others and have the means of getting it, it will be difficult if not impossible to prevent them from doing so.
this is descriptive when we're talking prescriptive and I think you're rather wrong anyway.

Brandon-

Why is that unfair? There’s a very clear argument to be made for why the CEO has a better claim to the tickets than the college student: he’s worked hard at fulfilling the desires of others in order to earn his money, and now he’s willing to spend a lot of that money to see a concert. What’s the point of working hard to earn extra money if you can’t use it to make your life more enjoyable?

why assume that CEOs work harder? I don't think that's a fair assumption. Besides, your overlooking the opportunity cost aspect of this scenario: it could mean twice as much to the college student but $60 seems like 3 times the amount of money that it does to the CEO. As a result the "free market" pricing system doesn't maximize welfare.

That doesn’t strike me as either relevant or measurable. And let’s say that your cynical (and rather bizarre) claim about the CEO’s motives is incorrect—what if they both like the band equally? If tickets are allocated on the basis of how long someone’s willing to wait in line, then the student gets them, because the CEO has work to do.

The CEO could take the time off it meant so much to him, but look- I'm not claiming that the students neccesarily value Radiohead more (though I find it typically likely, to be honest, based on my experience with CEOs) I'm arguing that this sort of pricing can't be shown to maximize welfare; the people who buy the tickets aren't neccesarily the ones who want them most. This is a free market problem that is caused when tickets are taken and sold for a greater price, and it is therefore caused by scalping.

Paul, the analogy between a

Paul, the analogy between a private party and Live8 only goes so far. Invitations to private parties are given to specific people, and concert tickets are assigned, from bird's eye view, pretty arbitrarily. Yes, it's people with more time or money or vigilance who get them, but there's no way to know beforehand who that will be. The reselling methods assigns them perhaps slightly more according to who really wants them and how bad.

In other words, they don't really care who you are sitting in the seat as long as you've paid for it. I don't see what's so wrong about trading that ticket off.

Does Subsidizing Exports

Does Subsidizing Exports Hurt Residents of Developing Nations?
Trent McBride asks whether agricultural subsidies help individuals living in developing countries or if the subsidies on net hurt them by reducing their competitiveness in specific sectors. There’s no easy

this doesn’t follow-

this doesn’t follow- we’re not discussing willingness to pay, as I’m not advocating that these tickets be free.

Of course willingness to pay matters. Suppose I value the ticket at $100 and you value it at $25. The seller sets the price at $50. If the tickets are sold on a first come first serve basis, and you purchase the last ticket instead of me, then there is a net social loss of $50 in utility. If I get the ticket instead, the net effect on society is the same as if the ticket prices were set correctly, at $100 (though there would be distributional differences between the seller and me; the $50 surplus would be consumer surplus or producer surplus depending on the price).

We’re discussing opportunity cost and we’re discussing something you might call “charity"- that is underpricing something for the good of lower classes at the expense of your profit opportunities. If they’re underpricing these tickets, then it’s charity. If scalpers are undermining their charitable efforts then we should make attempts to stop them.

I thought the charity here was from the proceeds of the concert, and not the concert itself. Unless the ticket sellers are going to means-test potential ticket buyers, there is no way they can price discriminate and weed out rich people who don't deserve charity. If they sell on a first come, first serve basis, they are rewarding people who are time-wealthy, which does not correlate with cash-poor. And as I've already said, the wealthy can just pay to have someone stand in line for them.

And why should "we" make attempts to stop scalpers? Why should the general taxpayer be forced to pay for police services so that the ticket seller can get a free ride to pursue his objective? If the ticket seller wants to pay the cost of price discriminating, by either hiring private security guards to police scalpers, means test customers, or through some other mechanism, great. If not, too bad.

Distributing tickets through a first come, first serve method is highly unlikely to allocate resources to their most valued uses.

to their most valued uses? Exactly what do you mean here? It seems like your baically saying “you can’t make as much money that way”

See above. We want to allocate resources to the people who value them the most. Willingness to pay is a rough proxy. If I am a passionate music fan, I would be willing to spend a lot on the ticket. You might be an occasional dabbler, who doesn't really like the music that much, but is willing to pay a low price for a night on the town. If the tickets are priced too low, as you suggest they should be, then there is no reason to think the tickets will be allocated to their most valued use (the passionate fans) as opposed to their least valued use (the people just looking for a cheap activity).

I’m arguing that we should cut out the middleman and make things more efficient, actually.

But the entire purpose of middle man arbitrage is to make things more efficient - i.e. to reallocate resources to their most valued uses. That's what stock traders do, and that's what scalpers do.

The drug war doesn’t make a good analysis because it’s a cse of a ttempting to stem supply, which doesn’t work.

Scalpers are supplying something as well, and anti-scalping laws are a case of attempting to stem that supply (which is why these laws don't work). You can't just wish away the fact that people who have a strong preference for tickets will find a way around whatever rules you wish to impose, and will end up purchasing tickets through people who do not have as strong a preference for tickets, who we generally call scalpers.

As I’ve argued, changes in

As I’ve argued, changes in price affect income distribution and create different market “equilibria"- the Eagles concert will sell-out filled with cell-phone toting hotshots if the tickets are expensive enough. It’ll sell out with a significantly different demographic if prices are lower. There’s no economic reason to prefer one over the other.

There certainly is an economic reason to prefer one over the other; people’s willingness to pay is a good measure of the amount of utility they enjoy.
this doesn't follow- we're not discussing willingness to pay, as I'm not advocating that these tickets be free. We're discussing opportunity cost and we're discussing something you might call "charity"- that is underpricing something for the good of lower classes at the expense of your profit opportunities. If they're underpricing these tickets, then it's charity. If scalpers are undermining their charitable efforts then we should make attempts to stop them.

Distributing tickets through a first come, first serve method is highly unlikely to allocate resources to their most valued uses.

to their most valued uses? Exactly what do you mean here? It seems like your baically saying "you can't make as much money that way"

This same problem occurs in the drug war: there are willing buyers and willing sellers, and any attempt to interfere with that process will be met with strong opposition. Stopping mutually beneficial trade is difficult, costly, and creates perverse incentives and unintended consequences. Which is one reason why anarcho-socialism would never work without some fundamental change in human nature.
this is inapplicable- I'm arguing that we should cut out the middleman and make things more efficient, actually. The drug war doesn't make a good analysis because it's a cse of a ttempting to stem supply, which doesn't work. I'm not trying to stem supply here, I'm trying to bring producers and consumers closer together.

Matt: As I’ve argued,

Matt:
As I’ve argued, changes in price affect income distribution and create different market “equilibria"- the Eagles concert will sell-out filled with cell-phone toting hotshots if the tickets are expensive enough. It’ll sell out with a significantly different demographic if prices are lower.

You're confusing two entirely different concepts. What you were arguing over in the minimum wage thread was that increasing the minimum wage tends to increase the income of unskilled workers, which increases demand for products purchased disproportionately by unskilled workers. In other words, changes in price affect income distributions across the whole population.

Here you're saying that raising the price will mean that the average income of the ticketholders will be higher if the ticket price is higher. Well, yes. But this doesn't have anything to do with "shifting equilibria," and classical economists were perfectly aware that the people at the left end of the demand curve are generally wealthy. Nor is it obvious to someone lacking your disdain for the well-off why this is a bad thing. As long as the tickets sell out, who cares who buys them?

We’re not discussing willingness to pay, as I’m not advocating that these tickets be free.

Willingness to pay more.

I’m arguing that we should cut out the middleman and make things more efficient, actually.

No, we're arguing that we should cut out the middleman and make things more efficient. You're arguing that we should cut out the middleman and make things (possibly) less efficient.

it’s also charitable to sell a ticket for below what it could fetch in order to allow your more impoverished fans to attend the concert.

Correct. It is charity. But it's not a very good form of charity. There's no means-testing, so most of the beneficiaries aren't poor, and frankly (this is probably just my esthetic elitism showing through), I don't think cheap rock concerts are a very good way to help the poor anyway. As I said above, a band could do a lot more good by auctioning off the tickets and donating the proceeds to charity.

Micha:
I thought the charity here was from the proceeds of the concert, and not the concert itself.

Actually, no. It's not really a charity concert. What they're trying to do is rally political support for increased foreign aid.

Also, I partially agree with Matt's analysis of scalping. It's not necessarily true that there's a net social gain from their activities. Suppose I'm in line just behind the scalper. He buys the last ticket, and I have to buy it from him at an inflated price. This is a net social loss because both of us had to stand in line, and it's an even greater loss when you exclude his profits.

Scalping does help to mitigate inefficient distribution of tickets, but when scalpers buy tickets explicitly for the purpose of reselling them, they make the initial distribution less efficient, and then profit from solving a problem that they helped to create. Yes, the event organizers created the opportunity by mispricing the tickets in the first place, but the benefits created by scalpers aren't necessarily worth the costs.

while what you write is

while what you write is clearly true, the more important factor is what it means to value something “$25? vs. “$100?. Such valuation will clearly be rooted in opportunity cost and income, and such is not an accurate reflection of “social welfare.

Not at all. I can still value something at $100 even if I don't have $100 to spend. It's just an arbitrary measurement of how much we value certain goods.

Now, we can argue all you like about the distortions caused by unequal income and wealth endowments, but the fact remains that a non-market system of allocation ignores people's valuations of the good, and has no way to sort out the passionate fans from the dispassionate bored people.

it’s also charitable to sell a ticket for below what it could fetch in order to allow your more impoverished fans to attend the concert. I think it’s fair to view this as charitable giving, and scalping then as someone attempting to take advantage, much like someone who’d try to aquire “toys for tots” in order to resell the toys on ebay. You might argue that giving the toys to poor children is an error because the toys could fetch a higher price on the market, but that completely misses the point.

This is actually confirming my general suspicious about libertarians’ treatment of charity. Often, charity seems a convenient excuse ("of course charitable giving would be encouraged in a Lib. society") but in practice you prefer pure profiteering.

That's silly and ad hominem. It may be charitable to sell tickets for a low price to poor people; but you have offered no mechanism by which we can distinguish the poor from the rich. I suggested means testing as one such mechanism, but admitted that it would be prohibitively costly to implement. You, on the other hand, have offered us nothing, and refuse to understand that without such a mechanism, no matter what intentions the seller might have, selling tickets at a low price will not have the intended effect. Intentions don't matter; incentives do.

Second, I reject the dichotomy between "profiteering" and charity. Charity is necessary under some circumstances, but more preferable is when we can help the poor at a profit. In this case, no one here has been arguing for a for-profit concert; rather, we have been arguing for a rational price setting mechanism, and using the proceeds to either fund these charitable programs, or perhaps using a portion of the proceeds to pay for the costs of a means tested program to let poor people in for free or substantially reduced entry fee.

Now, were I an asshole, I could turn around and say something like,

This is actually confirming my general suspicious about socialists. They don't really care about helping the poor; they just hate markets. They only care about good intentions, not good results. They don't seem to understand human nature and the role of incentives in guiding human behavior. Therefore, socialists are evil bastards.

But I'm not an asshole so I won't say that.

Arguing whther it should funded through taxation is a bug can of worms. If I argue this, your going to start talking about how taxes are a gun pointed at people’s heads and so forth. Fortunately it doesn’t weigh heavily on the discussion.

It certainly does weigh heavily on the discussion. Why shouldn't the ticket seller be responsible for paying the costs of his own contract enforcement? If he wants to come up with crazy rules that are costly to enforce, why should everyone else have to bear his burden? By free riding off of subsidized contract enforcement, he is not taking the full costs of his decision into account.

Note that this has nothing to do with the dogmatic natural rights libertarian arguments against taxation. This is the standard economic approach that externalities should be internalized.

"We want to allocate resources to the people who value them the most. Willingness to pay is a rough proxy. If I am a passionate music fan, I would be willing to spend a lot on the ticket. You might be an occasional dabbler, who doesn’t really like the music that much, but is willing to pay a low price for a night on the town."

I disagree with this. As long as we’re not giving away the tickets for free, we’re still measuring “willingness to pay.”

What is your disagreement? Spell it out. We are indeed still measuring willingness to pay, which no one argues is perfect, but is certainly better than no mechanism at all.

You are rhetorically playing off the image of one man with one ticket changing his mind about the show, when we’re actually dealingwith people who just try and make a living ensuring that ticket prices are artificially high.

There is no important ethical, practical, or economic difference between these two cases. It is simply a matter of scale. Give me an inch and you've given me a mile.

Randall- Your use of

Randall-

Your use of "rational" is presumably not in the economic sense of the word, which deals with preferences over goods, and how those preferences are satisfied s.t constraints. I'm not quite sure what you're asking me to do. I'm proposing that the response of thinking there should be an obligation on the middleman to contribute to charity is not obviously stupid or trivially wrong. It is not at all clear that not contributing would be morally ok, and Geldof's response is therefore not blatantly fallacious.

Note - I'm not defending Geldof when he says the touts exploit the poor - I can't see how this is true. I'm just saying that his sense of moral outrage is not something to be mocked by economists, overly sure and secure in their profession's "truisms".