However, my impression is that consumers would view this in a negative light, and that the harms to the seller’s reputation would be enough to outweigh the initially increased income. This seems to be the source of the inefficiencies that scalpers exploit/address.
This leads me to an idea which, I don’t believe is typically done, but which I don’t know why not: Why wouldn’t a company just, list a price that they are “going to sell it at”, and then “sell” a large proportion of them at that price to an entity which isn’t publicly connected to the company, and then that organization sells the items via auction (and returns a large proportion of the profits back to the company).
While on the one hand, I don’t see how I’d be able to tell if this was what was done, and therefore don’t see how to confirm that this isn’t what is being done in the cases where there are scalpers, I don’t think this is being done, and don’t know why.
That's often how a lot of today's "scalping" is done - AIUI a lot of "secondary market" tickets on StubHub etc. are sold by an entity that's owned by TicketHub or whoever, so that the artists can sell their tickets at the price the market will bear but put a low face price on them for the sake of their reputation.
The other thing NVidia could do is keep all their GPUs for themselves and mine crypto.
Who says they are not already doing that in some capacity?
Nvidia is already a money printing machine, and their margins are growing. I doubt it’s worth the time investment and risk exposure to the crypto markets for Nvidia. Better off using that time a money inventing better money printers.
If there were only a single consumer, a monopsony, they would have a large degree of influence on the price.
Building a public consensus on what prices are reasonable and what prices are "too high" allows for exerting similar pressures on the price, as if there were an organization which represented a large portion of the consumers and which would make a single decision for all of that portion (like, a purchasing union thing).
I hadn't realized this.
- basket size limited to IIRC a maximum of five tickets for the same concert,
- name of the buyer is linked to (idk, maybe even printed on) the tickets AND
- the named buyer would have to be there with the group to enter the venue.
I think this would probably be pretty effective in countering that bottom-feeding scum called scalper.
This arrangement works great: the reputation hit is very successfully outsourced to what you call “bottom feeding scum”. The band benefits from higher profit than they would otherwise be able to get if they tried to sell all their tickets at the publicly advertised price, which quite apparently is below the market clearing price. Ticket availability is increased: instead of having to fight to book the tickets in 8 seconds after the registration is opened, everyone can buy tickets at their leisure, simply paying more for convenience when they buy from scalpers.
Let me ask you this: for the band you are talking about, despite all the measures you describe, you still could buy tickets on StubHub, no?
At least this way parasitic scalpers would not benefit.
(this assumes that charity would be some actual charity, not just existing to transfer money to family of CEO or something similar)
Think about hospitals paying 10 times more for antiseptic and performing surgeries, instead of someone drenching their driveway with that 10$ antiseptic while someone else dies without a needed surgery. By raising the price and pocketing $90, the scalper has prevented resource waste and supplied to the patient and hospital a service worth hundreds of thousands.
If a scalper becomes a monopoly, they can extract a monopoly rent and really bleed everyone dry - but so can a producer in the same situation, so the problem is low competition not intermediaries.
While the fundamental issue is indeed price discovery, even in the most abstract market -- stocks/fx/derivatives there are numerous regulations in place to limit the predatory behavior of certain speculators.
It is astonishing we have no such regulation for real-life items.
Scalpers are compounding a problem, by reselling something at 5X the price they invite others to do the same, they create artificial demand and speculation.
> Think about hospitals paying 10 times more
No, think somali pirates in terms of transportation costs. If you only look at it throught the autistic-economical lens, they are entrepreneurs helping the market find the right price for transportation.
> the problem is low competition not intermediaries
The problem is inelastic markets and high moats. Think New York real estate market where mobsters around the world inflate property price and will destroy the local economy.
Think about drug cartels and drug prices.
Think about the USD and its status as a global currency and its relationship to the Military Industrial Complex.
We have something close for emergency situations. It’s illegal to price gouge during something like the aftermath of a hurricane.
It’s a well intentioned law. But for some things, it really may be best to let market forces dictate. For example, generators are in high demand and short supply during a hurricane. Folks snap them up so they can play Nintendo. Because they’re inexpensive due to gouging laws, they sell out fast. Now, someone who actually needs that generator for important, possibly life-saving work is SOL. And there isn’t a price incentive to expedite bringing in more supply.
Edit: I still think the scalpers are scumbags. Just wanted to point out an argument I found compelling in the past.
A civilized society works when supply and demand intersection determines the price of goods and services.
Governments should interfere for specific cases (life emergency, masks, etc) and there are laws prohibiting scalping for these commodities - rightfully so.
Your idea of government intervention would assume that government is a rational entity. The truth couldn’t be further from it. Bribes and political favors from large companies would leave everything worse than it was before.
Imagine you're a low volume medical instrument maker and you need a dozen STM32 chips for your life saving device. Scalpers make sure that these chips are available and ready to ship, albeit at a premium which the company is happy to pay for given the circumstances.
If price sky rocket, investors will increases production until prices are lower.
Government can mess with this by limit prices causing investors to stay away, meaning fewer chips get built, thus ensuing a temporary problem gets worse.
Those assembly lines are highly specialized and extremely efficient. After all this time, the best they can do is 1% extra efficiency per month.
A short term (1-5) year problem is no reason to takes steps to ensure a generational problem.
Free market is brutal about improving efficiency and growing with demand.
Your thoughts on that?
1) People with more money to spend get first pick of stuff.
2) Lottery / people who get to the store-front first.
Both of those are legitimate, although #1 does have a lot of support and theoretical backing in practice. Most of the third ways that get tried devolve back into one of those 2.
Good luck finding anyone willing to recognize this absurd point.
> "the problem is low competition"
Tell that to the GPU market.
Do you mean that you think it's absurd but you don't disagree that scalpers perform a social service?
Indeed, most people are pathologically incapable of performing utilitarian reasoning and have a very hard time with this point. Very unfortunate, because that's what informs most economic policy.
Such grubby people.
In basically all my hobbies, scalping has become the norm now. Computers, Japanese cars, tabletop games, hell even kids toys. It does feel like there's been a massive increase in the number of people with enough capital to see a trend and basically buy the market out with the intention of making a profit.
Scalpers at least ensure you can get it of you really need it (that is willing to pay a lot).
So people bought ventilators completely useless for them make supply shortages on them much worse. And unlike scalpers these people who do something like that due to panic are unlikely to sell them back to market when they're most needed.
No. That’s an extreme, just like your idea of what you call a “social service” performed by scalpers.
There’s a middle ground, and it’s certainly possible to regulate a market to mitigate the most pathological consequences of capitalism without Stalinism. In fact, that happens all the time.
- cheaper access to masks for the general population
- no mask shortages in critical infrastructure such as hospitals or other health care institutions
- general better handling and health outcomes during the pandemic
Leave it to the Americans that would consider sound policy and good health outcomes stalinist or communist recipes.
1. You want the government to control production of some resources.
2. Stalin controlled production of some resources
3. Stalin killed millions of people
4. Therefore, you want to kill millions of people
See here https://news.ycombinator.com/item?id=19970544 for an example that illustrates the point nicely.
When they finally made that step it did help. Incompetence caused scalpers to rise and profit while the rest suffered until the Government finally got their heads out of their asses.
Nothing about stalinism or communism in here. Just general incompetence.
The big question economically is whether these assumptions are generally correct. We have evidence in both directions, enough that most people can comfortably stick to their opinions and learned assumptions and political tribes. But is there a way to demonstrate that the money wasted is greater with hoarding/scalping than without, and under what conditions?
I really should read Wealth of Nations…
Very well said, but I'd go even further -- scalpers know other scalpers will do the same and create artificial shortage so they are actually preying on legitimate customers, so there's an adversarial component to the behavior of scalpers as well.
We rationed toilet paper during the lockdowns and there was a legitimate reason people were hoarding it, but we do nothing about scalpers who have no legitimate reason for their behavior.
Maybe this makes sense in that theoretical world - where there's no inertia, no friction, no capital investment, no jobs and livelihoods tied to the outcome. But in reality, scalping seems to be the purest form of parasitism. In a crisis, scalpers' activities may kill perfectly fine companies (or people) who would've otherwise limped through the rough times and survived, upsetting an industry long-term, and it forces everyone to waste their money.
And even if you think that this kind of market culling is fine, I'm not seeing why all that money should go to the first asshole who managed to secure a large loan in time to buy off the entire stock of some good.