The effect of ticket resale laws on consumption and production in performing arts markets

Abstract

Although most economists assume that ticket scalping is efficient, existing theoretical models make ambiguous predictions of the effect of ticket resale on production and attendance. This study uses variation in state and municipal laws to examine whether prohibiting or restricting resale has a positive or negative impact on consumer attendance and producer entry into arts markets. Our results show that restrictions on resale prices and license requirements stimulate attendance in performing arts events, but decrease the number of unique productions. This suggests that consumers value regulation that restricts prices and requires licensing for resellers over greater variety in productions. © 2012 EEA.