I Bet You Thought You Were Supposed to Hate These Guys

Like most Americans, are you frustrated by ticket scalpers? These middle men buy tickets for events and then resell them at more than face value to make a profit. If you’ve ever purchased from a scalper, you may have been frustrated at having to pay higher than face value for your seats. But what were the alternatives? Since there may be more people who want to attend an event than the event can hold, an efficient market mechanism is to ensure that the people who are willing to pay the most are the ones who get to go. This cannot be accomplished by a lottery system to allocate leftover seats, as that would fall to pure chance to decide who won. Waiting in a long line might be an option, but maybe your time is more valuable and you’d like to get a ticket now. The scalper is able to help you get the tickets you want in the amount of time you desire.

Prof. Stephen Davies explains that although ticket scalpers and other middle men are often looked down upon by the public because they don’t physically make any goods, they do provide a service that improves the efficiency of the market. Middle men who connect buyers and sellers and profit for their work do add value to society by enabling people to get what they want or sell what they don’t.

In some cases, the ability to buy goods at a low price and sell them at a higher price has saved lives. In 18th century France it was illegal to purchase food in areas with low prices and sell them for a profit in areas where food was scarce due to a shortage or a failed harvest. As a result, many people literally starved to death because no one would supply them with food. At the same time, England did not have these laws. So while food prices increased in areas struck by famine, we don’t see many cases of people actually starving to death. The middle man’s ability to buy food inexpensively in one area and sell it for a profit in an area with a food shortage literally saved lives. Though looked down on by society, middle men perform a useful function in improving human well being.

11 Comments

  1. Daniel Pealer

    Walter Block does an even better job defending scalpers in his book "Defending the Undefendable"

  2. andrei.roibu

    Free trade is a fundamental necessity of a free market, neither being able to exist without the other. Middle men have been trading for centuries, and many countries in the world made their fortunes and power by acting as middle men for exotic goods from distant places. Moreover, being a middle man you both help the producer, by giving him more time to tend to his products, and satisfy the demand, because it’s in your interest to sell something where the prices are higher, because, the demand is higher. 

  3. mackenzietanquary

    Interesting video!

  4. Grady Flanagan

    You paid based on your demand. Makes sense. Of course, the government cannot tax that secondary transaction. that’s the only reason its illegal.

  5. Damian Robinson

    Middle men are the facilitators in a market economy.

    I didn’t know that until I watched this video.
  6. Tim Eagle

    Isn’t it amazing when you can be exposed to a new idea that just makes sense.  What’s the difference between this and profiteering in war times?

  7. supersonicsixteen

    As a door to door salesman I can attest to this.  Most people don’t like to see me on their doorstep, but there are at least 5 people every day who really really love me at the end of the day.  It’s emotionally exhausting, but ends up being worth it. 

  8. Adelaida

    Oh my goodness! Incredible article dude! Thanks, However I
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  9. Mike Hines

    Middle men make sure tickets go to those who value them most? Really? Doesn’t he mean those who can spend the most money?  Isn’t it possible that the tickets may be valued more by someone who doesn’t have the money but are sold to someone who values the tickets less, but has more money?

    This video is true if money is the only way we measure the value (or utility) of an item. I suspect that this is not always the case. How can society account for non-monetary measures of value? You can’t put a monetary value on your kids, but you certainly do value them, yes?

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