Primary-Market Auctions for Event Tickets: Eliminating the Rents of “Bob the Broker”?

Economists have long been puzzled by event-ticket underpricing: underpricing reduces revenue for the performer and encourages socially wasteful rent-seeking ticket brokers. What about using an auction? This paper studies introduction of auctions into this market Ticketmaster in mid-2000s. By combining primary-market auction data from with secondary-market resale value eBay, we show that Ticketmaster’s “worked”: they substantially improved price discovery, roughly doubled revenues, and, on average, nearly eliminated potential arbitrage profits associated underpriced tickets. We conclude discussing why, nevertheless, failed to take off. (JEL D44, D47, L82)