Welfare Implications - WelfareImplications . rulingoutbrokers,

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Welfare Implications The model of ticket pricing presented here does not suggest any welfare recommendation either in favor or against brokers. If resale were prohibited, ruling out brokers, then the surplus appropriated by brokers would either go to promoters or to consumers depending on the price that promoters would charge in the late market. Overall, it would be welfare neutral since there would be no net change in total surplus. More realistically, however, one should go beyond the model to assess the welfare impact of brokers. On one hand, one may argue that brokers just take advantage of the situation and waste resources in rent-seeking activities. Although brokers make pro. ts in the model sketched earlier, one would expect that due to competition and entry—for example, through distribution and promotion activities—at least part of these pro. ts would be diluted. Under that interpretation, brokers should be banned, and
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This note was uploaded on 02/24/2010 for the course ECO 126 taught by Professor J during the Spring '06 term at The School of the Art Institute of Chicago.

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