Why Would Promoters Want to Deter Brokers

Why Would Promoters Want to Deter Brokers - rationale,...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Why Would Promoters Want to Deter Brokers? The model suggests two reasons why promoters would want to deter brokers. First, those consumers who buy late lose out in equilibrium since brokers capture some of their surplus. Consumers may lobby promoters on the basis that brokers do not add any value and rob them of their surplus. Consumers would ask promoters to intervene and restrain brokers with the belief that in the absence of brokers, they would be able to get tickets at face price. I will call this the “caught in the middle” rationale, since the con ict is really between consumers and brokers, and promoters are caught in the middle. Under this
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: rationale, promoters play a public relations game to dissociate themselves from the bad image that is associated with selling tickets at large premiums. This rationale is consistent with the popular debate on ticket scalping and with the justi. cation for resale laws that brokers deprive consumers from the right to buy tickets at face price (Diamond, 1982). Note, however, that prohibiting brokers will bene. t consumers only if promoters do not increase prices in the late market. This insight suggests a second rationale for why promoters may want to deter brokers, and this is because they want to capture the pro. ts that...
View Full Document

This note was uploaded on 02/24/2010 for the course ECON 1313212 taught by Professor John during the Spring '09 term at The School of the Art Institute of Chicago.

Ask a homework question - tutors are online