Thursday, December 13, 2007

Ticket price math

I could never understand why there are ticket scalpers. What ever happened to the free market? Why don't stadiums, theaters, and concert halls just charge what people will pay?

As usual the market will determine the final selling price but here's the real question: If someone's going to pay $1,000 for a ticket to go see Hannah Montana that originally cost $100, should that extra $900 go to a scalper - or to Miley Cyrus? I know what Miley Cyrus would say!

Other models are available. Priceline has an opaque pricing system; eBay's auction is more transparent. But neither is a fluid bid-and-ask system that would maximize the efficiency of the transaction over time. Airlines have revenue optimization down. American Airlines for example generates an extra $1 billion in annual incremental revenue from manipulating ticket prices.

But will they take you to see Hannah Montana?

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