My wife and I are going to celebrate her birthday by spending a couple of days in New York. After learning how high ticket prices are (even after the departure of the show’s lead actor) and seeing the usual contempt ladled upon resellers, though, we won’t be seeing Hamilton.
It’s like clockwork. There’s a major event or concert or play or whatever. The price is set below that which will equate quantity supplied with quantity demanded. So a secondary market develops where the people who originally bought the tickets resell them for a much higher price. That prompts those without tickets to howl with outrage that scalpers are over-charging people for tickets to the event.
It happens all the time, whether it’s “gouging” on hotel rooms the weekend of the Big Game, scalping tickets to see the Pope, or scalping tickets to Muhammad Ali’s memorial service.
If people are going to be mad, though, it’s not clear they should be mad at the people who are asking high prices for tickets to Hamilton. They should be mad at the people who are competing with them for tickets and driving up the price. The simple fact of the matter is that when more people want seats than there are seats available, prices will rise—and if prices aren’t allowed to rise, people will find other ways to “pay,” like standing in long lines for underpriced tickets.
With respect to the people setting the prices initially, it’s not as if they don’t know what they’re doing: perhaps being a tough ticket will give the show staying power and improve box office receipts later, when the show eventually goes on tour.
The buzz created by underpriced tickets is also a kind of advertising. After all, here we are, discussing tickets to Hamilton on a blog, and I’m adding it to the arsenal of “let’s talk about underpricing” examples for my principles of economics classes.
We won’t be seeing Hamilton in New York because the tickets are expensive and hard to come by. If anyone is to “blame,” though, it isn’t the producers. It’s the guy who’s willing to pay $850 for the seats we would otherwise occupy.