Suppose you want to badly watch the Wimbeldon Final ,and you are unable to get a ticket for it. Lets say a tout comes to you with a $1500 ticket and, given the great demand, you agree to pay $3000 and have a happy viewing at the final.
As per law, selling tickets in "black" is illegal. Lets examine this a little more carefully. What illegal activity did the tout indulge in ?
1) He took the trouble of standing in the Queue and getting the ticket.
2) He did *not* force the ticket on you, it was entirely your decision to buy it from him.
3) He made profit by buying a good at a lower price and selling the same good at a higher price.
Isn't this exactly what "legitimate" businesses do ?
1) Get their hands dirty to provide you a service.
2) Sell that service whenever you require it.
3) Make a profit by charging you a premium for that service.
So, why is the tout a wrong-doer or a criminal ? [ Because he doesn't pay tax ? Assume the money he earns is within the tax-slab where there is complete exemption. ]
You might now argue that the Wimbeldon authorities have already fixed a price for the ticket, and we have no 'right' to change it. But wait, we are talking of a free market. Who are they to fix the price. In fact, no price can be disallowed in a free market . If prices are too high and ridiculous , rational consumers will automatically ensure that the price is brought down by decreasing the demand.
So, the tout's rebuttal to the Wimbeldon Authorities will be , " Look, you guys are free to increase price. Because you are ignorant of the PREVAILING value of that ticket , you fixed a lower price and sold it at that 'wrong' price to me . So, don't blame ME for YOUR incompetence ! "
From an economics standpoint, I don't see what is wrong with the tout's argument. Interesting. What we consider to be "illegal" is probably not so illegal after all !
11 comments:
Interesting view!
Creating an artificial scarcity by buying off all the tickets would make such activity illegal, won't it.
But a nice view point.The ticket seller should shout laissez-unfaire:)
PS:Your classes have started!yeh yeh yeh :)
Prof : Ranganathan said the same thing to us too :)... In Wimbledon, movie tickets etc, true..but somehow I couldnt agree with him when he applied the same analogy to selling of wheat / rice / kerosine where touts take from PDS and sell it in black market..
@jakethesnake
You seem to be mired in socialistic thinking.
Let me make it clear -
There is nothing called 'artificial' scarcity.
He did not create the demand for watching Wimbledon. Demand is created by people interested in watching Wimbledon.
Obviously, there are more seats than the number of people wanting to watch.
Instead of having queues, auctioning of tickets be the best way to ensure better distribution of tickets.
If the Wimbledon authorities don't do the auctioning, these 'black' sellers would! There is totally nothing wrong in it!
Ajith,
You are confusing 2 different things.
I don't know whether the Prof explained it or not.
When you sell an item in an exclusive place at (an artificially) lower price than the market, supply from that will shift to the market to reduce the market price!
That's what happens with PDS.
What should be done is to give food coupons to buy rice, kerosene etc. at market price, not distort the market.
@naren -- In a nation like India, if u set up a system like food coupons at market price , how much of that would actually reach the deserving public ? Compare it with a system like sodexho, prevalent in corporate circles.. Since in a corporate world, most of things and logistic are already in place, u can easily administer such an effort.. But when u get to the grassroot level, things are never easy.. :)
I know cases where a ration card was denied to an old lady by concerned ppl becoz of the fact that her family had an opposite political allegiance.. And the official reason being "she is above BPL " ..Things are that corrupt.. Now, ration card is a one time distribution.. But food coupons cannot be like that..In a one - time distribution effort too, malpractices are very high.. now imagine what level of corruption would creep into the system if u r gonna distribute food coupons every month ?
Well off people might not be affected by all this..But there are lots of ppl living with monthly income of about 500 or so.. That section of society is mostly hit when touts play foul with PDS... Food coupons will introduce a different level of corruption..thats all it'll happen.
Say if I'm a tout..All I'll do in a food coupon system will be to bribe a few distribution officers, get one - two coupons meant for each family every month( think about the cumulative level ) and use that.. The scales of revenue for a tout under food coupon system will be much higher. :) .
@Naren
If demand and supply were equal then we would have the question of creating artificial scarcity if one particular buyer buys more than needed, with the intention of selling at a higher price.
If demand were greater than supply as is usually the case with Wimbledon or ur fav movie then auctioning would be the the best way for Wimbledon to get the best price for each ticket.
But what Wimbledon does in reality is that it fixes the price of its ticket in advance.(the price obviously decided with the intention of maximizing its profit)
Say there are 2000 tickets.Wimbledon will have to come out with a price which would be affordable to at least 4000 people(they would have to make it affordable to a larger number of people to ensure that all the tickets are sold.They wouldn't take the risk of fixing the price affordable to only the top 2000 buyers.What if they never turned up?)
Say Wimbledon advertises the price of the ticket as 250 bucks.
On D day 2500 buyers turn up. If Wimbledon sends out a mesg "We have decided to charge 260 for the ticket cause we feel we deserve 260"
That would be definitely illegal cause Wimbledon had advertised the price as 250-fixed.
Let us assume for a moment that the first buyer landing up there notices that there are 2500 people behind him and so buys up all the tickets and then puts up the poster "I have decided to charge 260 for the ticket cause I feel it is worth 260".How different is it from the prev scenario.Both are manipulating the fixed price for their advantage.This too, looks illegal to me.
@Kandy-Sorry for hijacking ur Blog :-).
There are two issues that your post talks about:
1) Re-selling a commodity
2) Re-selling a commodity at a price higher than what it was procured at.
I dont think re-selling at a higher price is illegal as long as you have the right to re-sell it.
In the case of Wimbeldon or PVR, tickets can be sold only by those who are designated to do it. You and I cannot sell our tennis tickets outside Centre court. However, there are certain entities like some tour operators who enter into an agreement with the All England Club to sell tickets as a part of an organised tour. I believe that in these transactions everything is visible - the price at which the tickets were bought from the All England Club and the price at which they were sold to the end consumers. So, it's not the higher price sale that is illegal, it is the act of selling that's illegal.
In the case of PDS, we need to keep in mind that the not everybody can benefit from the service. You need to possess a ration card, which is alloted only if you meet certain conditions i.e economic stratum in the society. Also, I think there is a restriction on how long the distribution chain can get and who can participate in it. The local ration shop is perhaps the last stop beyond which you can't have any more distribution points. So, if Big Bazaar procured rice from the ration shop, that would be illegal, forget selling the rice !
I can think of a situation where re-selling at a higher price is perfectly legal in the absence of any legal agreements. Reliance Fresh and Food Bazaar generally sell vegetables at prices cheaper than what the local subziwallahs who bring the vegetables to your house in carts. These subziwallahs typically buy their "maal" from the main vegetable market i.e K.R market for instance, where vegetables are sold in bulk and at very cheap rates. The subziwallahs, in turn, sell those vegetables to you at higher prices and make a cut. Nothing prevents them from buying vegetables from Reliance Fresh in bulk and sell them to you at inflated prices. I cant think of a reason why this would be termed illegal.
This is exactly what airlines do when they sell tickets - its called "tiered pricing".
Price changes based on demand levels, supply scarcity and the inherent value of the underlying service or product to different people.
What your "black marketeer" is doing is marketing 101. If he was to take it one step further, he would see that you are more crazy about tennis than I am and sell it to you at 4500, and to me at 3000.
That's a good business practice and that's exactly what hotels and airlines in the US do all the time.
Good observation though..Keep them coming!
Thanks for the comments folks.
Vinay, just to clarify : You mentioned that we cannot sell tickets because we don't have the right to. That's exactly my point. Why are we not allowed ? On what basis is it illegal ( from an economic standpoint ) ?
awesome view currently doing a-levels took econs realy awesmr view by u guys
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