In Defense of Bruce

This is a response to Salerno’s ‘The Boss Versus the Law of Economics’

My basic argument is that this whole mess with ticket scalpers is not Bruce’s fault. I further explain my position in the comments section in that blog post, in which a few people have tried to make a case against my position. This is just my opinion but I think I am the one arguing the more libertarian case(or just common sense case* I should say. I am sure that non-libertarians could agree with me) to this.

*There always is that infamous quote which states “Common sense is not that common”

UPDATE: So here is my comment to it and others’ reply to my claim.

How is this in any way Bruce’s fault? He is not an economic illiterate, at least if we look at this sole case. But to get this straight, $98 is quite average for a ticket to a concert that big. I just looked at Ticketmaster prices on a few other artists and they are around $80-$100 (not including shipping and handling).

But, nevertheless, Bruce has every right to determine what price he wants his tickets to be. There is no optimum price to which he is ‘supposed’ to sell his tickets for. And if Bruce’s tickets are sold through Ticketmaster, then it is Ticketmaster’s responsibility to provide security of sale. Since it is common for ‘ticket scalpers’ to be active when Bruce’s tickets are open to buy, this phenomena should be expected. Thus, it is up to Ticketmaster to come out and say to Bruce, “Given the experiences of ‘ticket scalpers’ and your tickets, you need to raise your prices, or else we won’t sell them for you.” But they did not say that to Bruce, they gladly sold the tickets. Thus, given these experiences with ‘ticket scalpers’, Ticketmaster should have been prepared for it, if they do not have the security to combat these ‘ticket scalpers’ then they shouldn’t accept the responsibility for selling the tickets in the first place.

The first commenter replies to my argument by claiming that I am assuming too much on Ticketmaster’s part. My reply:

Mitch,
I beg to differ. I not assuming too much of anything, this is basic business. Is not fair to say that (1) as the ticket distributor, they have the responsibility to maintain security of sale and (2) a potential ticket distributor should make analysis the situation in a cost/benefit way? Granted, they would not know all the untended consequences (it it quite impossible to know all, or in some cases most, consequences). But nevertheless, if this phenomenon is common (that is Bruce selling tickets for less attracts ‘ticket scalpers’), then this should be a pretty obvious ‘cost’ to analysis and to take into consideration.

Also, again, I must stress there is nothing in these articles that gives support to the claim that Bruce is an economic illiterate. I find it hard to believe I have to stress this in a libertarian website: A person selling his services has a right to sell at any price he chooses.

But then again, this is assuming that Bruce is actually selling his tickets for some low price. I actually see no evidence of this. His tickets were $98, that is pretty average for a concert that big. As I said, I went to Ticketmaster and looked at a few tickets from other big artists and the tickets were around $80-100. Thus, I am not quite sure where the initial premise of ‘Bruce selling his tickets for low prices’ comes in to play.

Another person replies:

Ticket scalpers couldn’t operate unless the tickets were, in fact, underpriced. A scalper who tries to resell the tickets at too high a price would be stuck with the tickets, and if they can’t sell them for more than they pay for them, they wouldn’t be out there reselling tickets.
Sure, a person selling his services has the right to price his services at any price he wants, but the consumers are the ones who decide how much they are willing to pay. A person who consistently underprices his services will find it as difficult to stay in business as the person who consistently overprices his services. That may not matter to Springsteen, who has other income from album sales and such, but it does make it hard on his fans, who may not be able to take off from work and spend hours or even days waiting in line for the sale of his tickets to start.

In which I replied to him:

Michael,
1) Again, as I keep stressing. The tickets were $98… pretty average for a concert that big.

2) What determines an ‘underprice’? To think of a price as underpriced is implying that there is some level price where you use as a guideline, so you can say either the price is under it or over it. Obviously you don’t use ‘averages’ (or range I should say) as this level of price since you consider Bruce’s price ‘underpriced’ but Ticketmaster is showing prices for concerts that big to be around that price. So I ask, what is your guideline price level to determine a price is overpriced or underpriced?

3) “Ticket scalpers couldn’t operate unless the tickets were, in fact, underpriced.”
This is false. As the case is shown that Bruce’s tickets are about the same prices as concerts that big. Scalpers are always going to be around trying to sell tickets that are more than what they bought them for.

4) “A person who consistently underprices his services will find it as difficult to stay in business as the person who consistently overprices his services. That may not matter to Springsteen, who has other income from album sales and such, but it does make it hard on his fans, who may not be able to take off from work and spend hours or even days waiting in line for the sale of his tickets to start.”

I can see your point if it was Bruce’s job to sell and distribute the tickets, but he does not. Ticketmaster takes over that service for Bruce. Thus in accepting the job, they are responsible for the security on sale too, since they are the ones selling the tickets. If Ticketmaster feels that they aren’t fit to be responsible for such task, they shouldn’t accept the job in the first place.

A different person replies back:

“What determines an ‘underprice’?”

The people who want to buy the tickets. The existence of arbitrageurs (scalpers) tells you they’re underpriced.

“This is false. As the case is shown that Bruce’s tickets are about the same prices as concerts that big.”

What does the price of “other concerts” have to do with anything? Maybe they’re all underpriced. Maybe Bruce’s tickets are worth more.

“Scalpers are always going to be around trying to sell tickets that are more than what they bought them for.”

And they would fail if the tickets weren’t underpriced to begin with.

I reply to him:

Peter,
(1)”The people who want to buy the tickets. The existence of arbitrageurs (scalpers) tells you they’re underpriced…What does the price of “other concerts” have to do with anything? Maybe they’re all underpriced. Maybe Bruce’s tickets are worth more.”

First time I have ever heard of the existence of scalpers as a determinate for underprice, but for the sake of argument lets accept that then. Lets assume then that all these prices are underpriced. Why then is Bruce the only one that constantly gets the scalpers? There are concerts that are just as big as Bruce’s and are cheaper, yet they do not have scalpers as a constant problem. And why is Bruce the only one that is making the headlines for underpricing his tickets and not the other artists?

(2) Secondly though, the economist mentioned is a neoclassical economist, so when he claims that Bruce is ‘underpricing’ his tickets, he is using the general definition, which deals with a given price level. In which it follows that if it is above the price level, it is ‘overpriced’ and below the price level is ‘underpriced’.

(3) Lastly, even if you argument is sound and valid, this still does not make it Bruce’s fault, for Ticketmaster is the ticket distributor and seller, thus responsible for the security of sale of these tickets.

-Isaac Marmolejo

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