I don’t really understand the outrage over scalpers. Isn’t this just normal market behavior? Is a retailer that buys things and sells them with a markup a scalper?
People seem to be willing to pay crazy prices for events.
People seem to be willing to pay crazy prices for events.
If you bought all of the food then offered the food at 10x the prices, we'd be outraged with you, yes.
Stakes are lower because it's a luxury good, not food, but it's the same idea.
If you bought up all the food, farmers would raise prices until either you couldn't afford to do that anymore or eventually there is a splurge of new farmers taking advantage of all your free money until you run out of money. It could maybe work in times of famine where the government introduces price controls or rationing; it does not work in normal times.
For black markets (which is essentially what scalping is) to work, there has to be some shortage of a good that is priced artificially low. It works with concerts because singers can only sing so much but they also don't want to make the concert so unaffordable that only millionaires can go. There are very few situations like that. In most industries you would just increase prices until supply equals demand.
This is the reason that businesses don't try to monopolize the food industry. It's not competition as we just saw from the egg industry. The government gets pushed back from the masses pretty quickly on food related issues.
But you provided your own counterexample with eggs?
The onion futures thing is kind of interesting, because it was essentially the opposite of a scalper - they didn't try and buy all the onions to make price go up, they did it to crash the price of onions so that their short positions would pay off. Still a fair counter example to the idea that the market would self correct by itself.
People not trying to monopolize the food industry is a bit of an american centric view, e.g. Canada had a government mandated wheat monopsony for a long time. I think australia had something similar. I'm sure there are plenty of historical food monopolies. They of course couldn't be too greedy or its off with their head.
I should note that outrage doesn't seem to land on the people who buy from scalpers, which is...probably correct? Seems easier to say "don't break the contract" to scalpers instead of fans who are just able to pay more.
Like the logic here is the scalper company buys all the crops and then resells at an exorbitant mark up because everyone needs to eat, but then the market price becomes what the scalper is selling for. Would the farmer really leave that much on the table? They may be willing to give some discount to sell all at once, but there comes a point where it is no longer worth it to them to do so. The whole scalping thing only works if you can buy low sell high, but if you sell high the people you are buying from will start to notice that they too can sell higher to other people.
Concerts are different because there are brand reasons to keep prices low. Farmers aren't a charity, they aren't going to sell significantly below market price just for the good vibes.
This makes me think that it is possible for corporations to suppress the price on the farmer side and fix it on the consumer side.
This happened to at least some crops in Turkey in the past, for example farmers were selling hazelnut for 15TRY/kg and you could only buy it for 100TRY/kg in big cities. Farmers were actually complaining that they couldn't even make a profit from growing hazelnut.
Corporations would like to do this with even water if given the chance as Nestle CEO was saying himself in a famous video.
So they would for example do it with bread and starve people in the process if it means they can make money. And I think that they could easily do this for example in US if they didn't correctly fear that people would force the goverment to smash them.
Also the selling format doesn't have to be the crop itself. For example they make nutella from hazelnut. So farmers can't associate it directly with their selling price even though it is obvious that they are getting shafted.
Another possibility is the farmer selling 80% to the corporation for the normal price and then selling the rest at a massive markup so both profit. Same thing that is happening with ram manufacturers. Then the whole thing is justified as free market and only the consumers get hurt because in the end you have to buy RAM. Or equally the corporation could pay the farmer a 20% bonus and still make 80% extra profit on end consumer. Farmer might not object if the scheme is dependant on the corporation.
An auction would be the obvious solution, and I guess you could argue it effectively is an auction, just with initial sales that pretend to be a race and are actually sold to speculators who then run the auction.
Without reselling scalpers have no reason to scoop up the tickets.
So if you prevent reselling... then concertgoers just have to do a lottery or something for the scarce resource and people who aren't interested in the concert have no reason to buy the tickets! Just a better experience for everyone except for the scalpers and I guess Taylor Swift cuz she won't know the price ceiling for tickets.
Yes, this is “normal” in the sense that it is common. It is “normal” in the same way that cancer is “normal”.
No, this is not “normal” in the sense of being behavior the government should just tolerate. It is in the same category of market failures as monopolies and externalities.
That said...if you can do that, you'll probably find that some additions of economic value are far more defensible than others, so it shouldn't all be flattened in the manner you're suggesting.
I mean, scalpers add economic value, right?! They allow (wealthier) people who didn't stand in line at the right time to have a chance to purchase a ticket!
Subscriptions are rent-seeking. Loans are rent-seeking. Spending millions in capital to buy a building and renting apartments for thousands? Rent-seeking. Copyright and patents, for sure, unless an AI company is involved in which case copyright is noble and must last a thousand years, because AI companies are rent-seeking.
And anyway, if enough people don’t like the things people are doing with money, we can stop them from happening! So a pretty odd gotcha, to me.
>typical rent is many, many times the value of someone looking after the maintenance and building insurance for you
I'm curious about this.
I'm not sure if there's a universal rule of thumb, but it's something like "expect 1-4% of the home's value in maintenance every year" - $4,000 to $16,000 on a $400,000 home. Take the lowest end of that - $333/month in expected maintenance a year. Add $100/month for home insurance.
You're claiming "many, many times" $433 a month in that scenario? Given more recent interest rates and the uptick in "maybe you should rent for awhile, actually" articles/videos I've seen, this doesn't strike me as plausible...
Where do you live, if I may ask? I live in a reasonably sane market which might be why this isn't clicking for me.
To use the real estate example, there is a difference between a developer selling a house it built, and an investor selling a house that he bought when it was cheaper.