Question

1- Does scalping tickets affect efficiency, equity, or both? If so, does scalping increase or decrease efficiency, equity, or both?

Answer 1

Scalpng tickets means resale tickets at a large or quick profit. This is a phenomena we get in cinema hall, music, sports tickets etc. Now the question is whether this ticket scalping affect the efficiency, equity or both. Ticket scalping does not affect the efficiency but it affects the equity.

Due to scalping there decreases the efficiency because in a free market the optimum efficiency reached where buyers willingness to pay is equalised with sellers willingness to sell. Here in scalping when a ticket scalpers is selling a ticket , the seller is charging the highest price which consumer wants to pay. It means the seller is charging the reservation price of the consumer. As a result of this the consumer falls. But producer surplus increases. But producer surplus increases at the cost of consumer suplus. Economic efficiency is a situation where we can able to better of the one without affectiing the other. Here we are affecting the consumer surplus which reduces , though the producer surplus increases. Because the ticket scalpers will sell the ticket at higher prices than its face value.

So it is efficient because there satisfy the willingness to buy and willingness to sell but the efficiency decreases because the seller is charging the higher prices with the consumers reservation price but consumer surplus falls and producer suplus increases.

Now due to scalping there will be decrease in equity. Because when a buyer comes to buy the tickets will be sold to those who placed the greatest monetary value on them. This is efficient but not fair. Because if a industrial worker comes at the end of the day with his or her daily income then to satisfy his or her willingness he or she spend all the money. Whereas this value is far grater than a rich businessman who also pays for that. So here we do not have equal distribution and equity hampers because the rich man can pay twice of that amount. The industrial workers affected more due to purchase of that ticket whereas the businessman will not be affected that much. So we can say due to scalping there reached efficiency but it decreases the efficiency and equity.