Introduction 

Mamie Kresses

Attorney

FTC Division of Advertising Practices
Things to Know

• You must go through security every time you return to the building

• Return badge and lanyard before you leave

• In the event of emergency, follow instructions provided over PA

• In the event of evacuation go to assembly area

• Event will be photographed, webcast, and recorded

• Restrooms are just outside conference room

• Cafeteria is open for lunch

• Food and drink are not permitted in the auditorium

• #FTCticket
Welcoming Remarks 

Rebecca K. Slaughter

Commissioner

Federal Trade Commission
Keynote Address

Eric Budish

Professor of Economics 

The University of Chicago 

Booth School of Business 
How to Fix the Market for 

Event Tickets

Eric Budish

Professor of Economics

University of Chicago, Booth School of Business

First scalped ticket: Sept 17, 1986 (Mets clinch)

FTC Workshop “That’s the Ticket” on 

Consumer Protection Issues in the Ticket Market
Charles Dickens, Nov 1867

Boston, November 1867

• “... But the crowd out in the cold was a most patient, orderly and gentlemanly 

crowd, and seemed determined to be jolly and good-natured under any 

circumstances.”

• “Jokes were cracked, some very good and some very poor; quotations from 

Dickens were made, some apt and others forced...”

• “Everything in the sale of tickets within the store seemed to be conducted 

with entire fairness. The limit was set at forty-eight tickets to one person—

twelve course tickets—so as to prevent, as much as possible, ticket 

speculating.”

• “But this was not entirely avoided. Speculators were on the streets and in 

the hotels selling tickets readily for $10 and $15 each for the opening night, 

and a few as high as $20 each. Tickets for the remaining three nights were also 

sold by speculators at high prices. At about 7:30 o’clock last evening every good 

seat and nearly every poor seat in the hall were sold; indeed, the only seats that 

could be bought were those on benches in very unpleasant places.”
Charles Dickens, Dec 1867

Three weeks later, in New York City ... 

• “... the widespread notoriety of the sale ... had the effect of gathering an immense 

concourse of persons, long before the hour appointed. At 8 o’clock, Tuesday 

evening, a little newsboy took up his station next the main door ... Gradually this number 

was augmented until at day-break over 150 persons had gathered”

• “A large proportion of those standing near the head of the line were ticket 

speculators, but scattered through the single file were many laboring men and 

several little boys, who only came to be bought off. The little fellow who led the 

force was very fortunate in selling his place to a Southern gentleman, it is said, for 

$30 in gold. There were many such instances—indeed it was not uncommon for anxious 

individuals to give from $10 to $30 for the privilege of supplanting another.”

• “A detachment of Police officers ... was present to preserve order.”

• “...the unsuccessful ones who brought up the rear, retired with expressions of 

disgust more forcible than elegant.”
Economics of Underpricing, Without Resale

• Issue 1: Inefficient 

allocation

• Issue 2: Seller leaves 

“money on the table”

• Gary Becker, 1991: 

“along with many 

others, I have continued 

to be puzzled by such 

pricing behavior”
Economics of Underpricing, Without Resale

• But many economists, 

including Becker, found 

reasonable explanations for 

underpricing

– Events are a social good

– Public image, want to be 

perceived as “fair” 

– “Best” fans might not be 

those able to pay the most

– Careers are long (hopefully)

• Underpricing as in the 

long-run interests of the 

artist/team, not some big 

economic blunder
Resale Technology, Then and Now

• Dickens Era

– Primary market: lines, queues

– Secondary market: resellers mainly outside the venue, at 

hotels, etc.

• As recently as 1990s: similar to Dickens Era

– Spitzer AG report. “Diggers”, “Scalpers”, “Ice” 

• Economics of Pre-Internet Ticket Resale

– Localized

– Few economies of scale

• One person = one spot in line

• One person = one tout outside the venue

• (Exception: corrupt box offices.) 

– A bit shady ...
Resale Technology, Then and Now

Economics of Internet-Era Ticket Resale

• No longer localized.

• Massive economies of scale.

• Scale in the Primary market: 

– A single broker can purchase underpriced tickets across the country

– Bots to automate! Win “race to click”. (Analogy: high-frequency trading)

– Low-wage overseas workers to outwit captchas, etc.

• Scale in the Secondary market: 

– A single broker can resell across the country

– A single website can make markets for events across the country

• Much less friction. 

• Also less shady.

– Ordinary customers can use eBay, StubHub, etc. 

– “I paid my way through college”
The Internet Broke the Old Equilibrium 

• It’s easy to see why an artist or sports team might 

wish to charge a true fan a low price.

• It’s really hard to tell a story where artists or teams 

want to charge brokers a low price, who then charge 

the fans a high price on StubHub, etc.

• It just makes no sense.
Hannah Montana

The Internet Broke the Old Equilibrium
Ed Sheeran

The Internet Broke the Old Equilibrium
The Grateful Dead

The Internet Broke the Old Equilibrium
Bruce Springsteen

The Internet Broke the Old Equilibrium
Hamilton

The Internet Broke the Old Equilibrium
The Internet Broke the Old Equilibrium 
The Internet Broke the Old Equilibrium 
The Internet Broke the Old Equilibrium 

• Q: What happens when you give away FREE 

MONEY? 

• A: RENT SEEKING!

• Scale of the problem ...

– StubHub alone nearly $5bn of volume

– Ticketmaster another ~$2bn of volume

– Total: $15bn? (Estimates vary)

– Ticketmaster: 20% of all tickets get 

resold. In extreme cases, up to 90% for 

some events. 

– Recent lawsuit against a ticket broker 

claimed that a single ticket broker was 

able to get 30-40% of all tickets to 

Hamilton

• “The secondary market is now the market”
Who Gets the Rents From Resale?

• Example

– $100 primary-market price (inclusive of fees)

– $200 secondary-market resale value (inclusive of fees)

– $200 - $100 = $100 is “economic rent”. The “prize” in the rent-seeking competition. 

– Secondary market venue fee: 

• 15% of resale price to buyer

• 15% of resale price to seller

• Resale price = $174 (because $174 (1 + 0.15) = $200)

• Total fees = $52

– Broker profits

• Broker gets the rest of the economic rent: $100 - $52 = $48

• Equivalently, gets $174 * (1- 0.15) = $148 net of fees, paid $100, nets $48

– Punchline: at current fees, secondary-market platform gets a large chunk of the 

underpricing rents. For tickets with 100% markup, split is about 50/50. 
Who Gets the Rents From Resale?

Note: Fees as observed by the author on June 6th, 2019 for tickets for the Rolling Stones, Chicago, June 21st, 2019.

(*) computed as (Buyer Fee + Seller Fee) / (1 + Buyer Fee)

(**) computed as (Buyer Fee + Seller Fee) / (1 – Seller Fee)

(^) see previous slide for example of calculation

Platform Buyer Fee Seller fee

Total Fee as % of All-In

% of Rent Captured by Platform if 

Ratio of Market Price to Face Value 

equals: (^)

Price to Buyer (*) Take-home to 

Seller (**) 1.5x 2x 5x

StubHub 22% 15% 30.3% 43.5% 91.0% 60.7% 37.9%

Ticketmaster 17% 14% 26.5% 36.0% 79.5% 53.0% 33.1%

SeatGeek 30% 10% 30.8% 44.4% 92.3% 61.5% 38.5%

VividSeats 28% 10% 29.7% 42.2% 89.1% 59.4% 37.1%

TickPick 0% 10% 10.0% 11.1% 30.0% 20.0% 12.5%
Economic Gravity

THREE CHOICES

1. Set a market-clearing price in the primary market. 

2. Set a below-market price in the primary market. Much of the “real” allocation will happen 

in the secondary market. 

3. Set a below-market price in the primary market + ban resale. 

• Key point: setting a below-market price, and hoping/praying that the tickets go to fans and 

never get resold, is economics fantasy land. 

– The way to get tickets to fans and not have them get resold, is to either set a market-clearing price 

in the first place, or to prohibit reselling them.
Choice 1: Market-Clearing Price

• Methods

– Auctions

– Dynamic pricing

– Use past data

Stakeholder Effects

Artist / Team • Pro: more revenue

• But: bad PR? Risk of empty seats (TSwift)

Secondary Markets • Con: less volume ... took away the “free 

money”

• Still a role for secondary market, just 

reduced

Brokers • Con: took away the “free money”!

• Nuance: also engage in less rent-seeking 

activity

Fans • High prices

• Arguably similar allocation to status quo

• Fans who would have been able to 

purchase at below-market price are worse 

off
Evidence on Auctions

Source: Aditya Bhave and Eric Budish, “Primary-Market Auctions for Event Tickets: Eliminating the Rents of ‘Bob the 

Broker’”

Average Prices

• Face: $145

• Resale: $280

Average Prices

• Auction: $274

• Resale: $280
Choice 2: Underprice, Much of the 

Allocation in the Secondary Market 

Stakeholder Effects

Artist / Team • Less money than market-clearing price

• Less heat from fans. “Tried” to set a fair price

• Some artists/teams seem to divert tickets to

secondary market, to get market price

Secondary Markets • Winner: get a big share of the free money

Brokers • Winner: get a big share of the free money

• Nuance: “marginal” broker should break

even, free entry (Hsieh and Moretti, 2003)

Fans • HATE THE STATUS QUO.

• Hence 6724 comments to FTC. 
Choice 3: Low Prices, Ban Resale

Implementation Details

• IDs, credit cards, or phones to tie 

ticket to buyer (analogy: plane 

tickets)

• Some scope for refund if plans 

change, with penalty fees (analogy: 

plane tickets)

• Speculator who buys N tickets could 

resell N-1 of them, “walk them in”, 

but this doesn’t scale. More like 

Dickens-era resale than Bots-era 

resale

Reference: Pascal Courty, “Ticket Resale, Bots, and 

the Fair Price Ticketing Curse”

Stakeholder Effects

Artist / Team • Can set the price they want, 

including below-market 

Secondary 

Markets

• HATE THIS.

Brokers • HATE THIS.

Fans • Pay “fair price”. The “free money” 

goes directly to them.

• Some allocative inefficiency. Even if 

I really want to go, may not be able 

to. (Greg Mankiw $2500 for 

Hamilton tickets).
Politics of Choice 3

• Concentrated Interests oppose it

– Secondary market players

– Brokers

– Arguably Ticketmaster, which has 

taken a “join the party” approach 

to the secondary market, now at 

~$2bn volume

• Dispersed Interests benefit

– Fans

• Artists/Teams may have a loud-enough 

voice to effect change
Policy Proposal I

• Artists and Teams should have the CHOICE to 

restrict resale for some or all of their tickets
Policy Proposal I, cont.

• “FREE MONEY” -> massive rent-seeking, broken market.

• Only 2 real alternatives to the status quo

– 1) Set a market-clearing price (Taylor Swift, Rolling Stones)

– 2) Set below-market prices, restrict resale

• I propose that artists/teams be free to choose their preferred mix of (1) and (2)

– I suspect many will choose some of both

• I understand both (1) and (2) are bad for secondary-market players 

– You may hear some complaining ...

– Chicago economists have a thick skin.
Policy Proposal II

• Fee transparency

– Fees are both OPAQUE and HIGH

– In both the PRIMARY and SECONDARY markets

• Proposal: adopt the DOT model

– You have to show the all-in price, if the fee is mandatory 

(i.e., can’t buy the ticket without paying the fee)

• Note: firms will not “unilaterally disarm”

– StubHub experiment shows that transparent fees, in the 

context of a market that is otherwise often non-transparent, 

is very costly

– (Blake, Moshary, Sweeney and Tadelis, “Price Salience and Product 

Choice”)
Concluding Thoughts

• The ticket market has been broken for a long time

– The structural economic issue is artists/teams sometimes want to “underprice” their 

tickets relative to what the market will bear (fairness, PR, long-run economic interests, 

etc.)

– This creates an incentive for rent-seeking behavior

• The internet has badly exacerbated the problem

– Rent-seeking has gone haywire

– For many events, the secondary market is now the market

• Two proposals that would do a lot of good to fix the market:

1. Allow artists and teams the choice to restrict resale for some or 

all of their tickets.

2. Fee Transparency. In both the primary and secondary market. 
Concluding Thoughts

• I want to close by connecting these two simple policy ideas to ideas that I’ve learned 

from two influential figures in the history of economic thought:

1. Milton Freidman

– “Free to choose” 

– “Rules of the game” as the role of government 

2. Alvin Roth

– Market Design

– Matching: some markets don’t clear through price alone

• I think the tickets market may be one where we’ve learned, from 100+ years of history, 

that price alone may not be the only determinant of “who gets what”

• Whether artists/teams determine the allocation based on who pays the most, who’s 

willing to wait in line, likes on Instagram, etc., it should be their choice.

• And whether in the cheap seats or front row, fans deserve a transparent market
Keynote Address

Eric Budish

Professor of Economics 

The University of Chicago 

Booth School of Business 
Panel 1-A: Bots and the BOTS Act

• Gary Adler - National Association of Ticket Brokers

• Rami Essaid - Distil Networks

• David Marcus - Ticketmaster

• Jeff Poirier - StubHub

• Joe Ridout - Consumer Action

• Noah Stein - New York Attorney General’s Office

• Moderator: Mamie Kresses - FTC
BREAK
Panel 1-B: Other Consumer Protection Issues 

Around Ticket Availability 

• Gary Adler - National Association of Ticket Brokers

• Russell D’Souza - SeatGeek

• David Marcus - Ticketmaster

• Jeff Poirier - StubHub

• Joe Ridout - Consumer Action

• Bob Roux - Live Nation Entertainment

• Noah Stein - New York Attorney General’s Office

• Moderators: Mamie Kresses and Eric Budish
LUNCH
Panel 2: The Adequacy of Ticket Price 

and Fee Disclosures 

• Laura Brett - National Advertising Division of BBB

• Russell D’Souza - SeatGeek

• Sara Fisher Ellison - MIT Economics Department

• Anna Laitin - Consumer Reports

• John Lawrence - StubHub

• Tamara Mendelsohn – Eventbrite

• Patti-Anne Tarlton - Ticketmaster

• Moderator: Michael Ostheimer - FTC
BREAK
Panel 3: Consumer Confusion -

What and From Whom Am I Buying?

• John Breyault - National Consumers League

• Gilbert Hoover - The Shubert Organization

• Katy McCabe - Google

• Michael Marion - International Association of Venue Managers

• Michael Newquist - Ultimate Fighting Championship

• Carl Szabo - NetChoice

• Parul Shah - UK Competition & Markets Authority

• Don Vaccaro - TicketNetwork

• Moderator: Devin W. Domond - FTC










About Philadelphia 

Theater: We are an 

independent show 

guide not a venue or 

show. We sell primary, 

discount, and resale 

tickets and prices may 

be above or below 

face value.

...Zone seating. This 

listing describes tickets 

that the seller does not 

have in hand, but will 

obtain for you. ... We 

guarantee that your 

tickets will be within the 

zone or section listed 

or one comparable ... 

or your money back. ...

Panel 3: Consumer Confusion -

What and From Whom Am I Buying?

• John Breyault - National Consumers League

• Gilbert Hoover - The Shubert Organization

• Katy McCabe - Google

• Michael Marion - International Association of Venue Managers

• Michael Newquist - Ultimate Fighting Championship

• Carl Szabo - NetChoice

• Parul Shah - UK Competition & Markets Authority

• Don Vaccaro - TicketNetwork

• Moderator: Devin W. Domond - FTC
Closing Remarks 

Mary K. Engle

Associate Director 

FTC Division of Advertising Practices