Question

In an opinion column in the New York Times, advocating increased legal penalties for people who use ticket bots, Lin-Manuel Miranda, the star and creator of the musical Hamilton, wrote, "I want the thousands of tickets for shows, concerts and sporting events that are now purchased by bots and resold at higher prices to go into the general market so that you have a chance to get them." a. What does he mean by the “general market"? b. Suppose that ticket bots were eliminated, and theaters were able to enforce a limit of each person being allowed to buy only four tickets. Is it likely that most of the people attending a hit Broadway musical like Hamilton would pay face value for their tickets? Briefly explain.

Short answer

a) By 'general market', he refers to the official selling platforms where tickets are sold at their original price to all members of the public. b) Even with ticket bots eliminated and a limit on how many tickets each person can purchase, it's not guaranteed that most people would pay face value for their tickets to a popular show like Hamilton. This is because when demand exceeds supply, prices can rise either due to official price increase or through illegal resale at higher prices.

Step-by-step solution

Understanding 'General Market'

The 'general market' that Lin-Manuel Miranda refers to is essentially the common marketplace where tickets are sold at face value. This is usually the official platforms or box office where all members of the public, as opposed to bots, can have an equal opportunity to buy tickets at their original price.

Analyzing Scenario of Ticket Bots Elimination and Ticket Limit

Regardless of how many tickets each person is allowed to buy, the demand for popular shows like Hamilton often far exceeds the supply. Eliminating ticket bots and limiting the number of tickets one person can purchase will indeed mean that more people have a chance to buy tickets at face value. However, that does not guarantee that they will be able to do so due to the high demand.

Identifying Potential Outcomes

When demand exceeds supply, prices can still rise either through legal or illegal means. Legal means include raising the official prices or adding different 'premium' pricing tiers. Illegal ways involve people buying tickets at face value and then reselling at higher prices (scalping). Therefore, it's not guaranteed that the majority of attendees would pay face value for their tickets as prices can still rise due to excessive demand.

Key concepts

General Market Tickets

Understanding the 'general market' for tickets involves recognizing how the ticketing industry operates for live events, such as concerts, theater productions, and sports events. The general market is essentially the primary marketplace intended for the initial sale of tickets. These sales are typically conducted through official channels, like the event's box office or an authorized ticketing platform. Consumers can purchase tickets at face value, which is the original, unmarked price set by event organizers.

In Lin-Manuel Miranda's perspective, the 'general market' is seen as a fair landscape where access to tickets is equitably distributed amongst potential buyers -- without artificial inflation of prices or hoarding of tickets by scalpers utilizing automated programs, such as ticket bots. To ensure that consumers stand a fair chance at purchasing tickets, there is a need for mechanisms to prevent the manipulation by these bots, such as CAPTCHA verification or purchase limits, to maintain the integrity of the general market.

Ticket Bots

Ticket bots represent a significant challenge in the economics of ticket sales. These automated software programs, designed to buy up massive amounts of tickets at lightning speed, skew the market by limiting the availability of tickets to the general public. Utilized by scalpers, bots can purchase tickets much faster than a human can, often the moment they go on sale, leaving many fans empty-handed. These scalpers then resell the tickets at inflated prices on secondary markets.

Legally combating ticket bots involves implementing stricter regulations and penalties, not only on the usage of these bots but also on the sale mechanisms that permit their operation. As bots circumvent typical purchase limits and security measures, ticket vendors are constantly evolving digital countermeasures to block their effectiveness. With the use of ticket bots, the supply and demand economics become skewed, as artificial demand is created, leading to prices on the secondary market that don't accurately represent the true market demand.

Supply and Demand in Ticket Sales

The principles of supply and demand are fundamental to understanding the economics of ticket sales. When the supply of tickets is limited, and demand for them is high, prices tend to increase. This is particularly evident for must-see shows or events, such as hit Broadway musicals like Hamilton, where the demand for tickets can far exceed the available supply.

Even with measures in place to curb the influence of ticket bots and scalping, such as purchase limits per individual, the high demand for certain events means those tickets may still end up being resold at higher prices, albeit through different channels. This could be through legal avenues, such as official 'premium' tickets, or illegal scalping, despite increased penalties. The intrinsic value attached to live experiences, combined with the limited nature of the event (such as a one-time show or limited engagement), creates a market where tickets can become high-demand commodities, often resulting in a price that exceeds their initial face value.