That’s the Ticket: The Economics of Ticket Scalping
Students will be able to:
- Evaluate how the market price for a sporting event is affected by ticket scalping.
- Understand that the face value of a ticket and the market price are often different.
In this economics lesson, students will apply supply and demand to learn about price ceilings in the ticket market.
Display PowerPoint slide 1 (use the notes area as needed). Ask students what could possibly explain this strange situation that sometimes occurs outside major sporting events? Write the words “ticket scalping” on the board and invite students to provide you with a definition. Ask students who they think anti-scalping laws are designed to protect.
Begin by asking the students why someone would pay more than the face value for a ticket. Show slide 2 and explain (using notes). Next, ask students if the face value of a ticket is the same as the market price for a ticket (again use slide 2 notes). Explain that some communities have created anti-scalping laws. These laws do not allow fans to sell tickets to other people for more than the face value. This article provides a summary of such laws from around the country: SeatGeek. Introduce the term price ceiling. Show slide 3 and use the notes.
Display slide 4. Ask students to work in small groups to answer the two prompts. Use the notes to assist with the first question and reveal the answer to the second question after conducting a class discussion.
Have students visit a website like StubHub. Ask them to find two sporting events from their local area where the market price exceeds the face value. Ask them to demonstrate this situation on a supply and demand graph. They will also have to visit a website that shows what the face value of the ticket is in order to see if the ticket prices on Stub Hub have exceeded the face value.
Write a short essay that explains both the positive and negative issues related to anti-scalping laws for sports tickets.
Ask students to read this recent article about the prices of tickets during the 2016 World Series: CBS Sports: Cubs-Indians World Series Game 7 tickets: Standing-room only seats hit four-digits. Have a discussion around the following questions:
- Demonstrate on a supply and demand graph why the prices for World Series tickets in Chicago were so high.
[Students draw a supply and demand graph with the demand curve shifted far to the right, driving prices up.]
- Are these very high prices a problem and would an anti-scalping law be effective in solving the problem?
[An anti-scalping law may keep some sellers from selling at such high prices. The law could also lead to a shortage of tickets available to those wanting to buy them on the secondary market. It could also cause a black market to develop where re-sellers operate “under the table.”]