Ticket scalping is a favourite and recurring theme in the media (for example, see this piece on Stuff from February this year). It is also one of the areas where economists and the general public most disagree (other possibilities for that title might include the gains from trade, and rent controls). The key difference is that the general public's view is that ticket scalping is unfair and exploitative, while the view of many economists is that ticket scalping simply represents an expected market activity when the initial price is set too low.
I've written in detail about ticket scalping before (see here), so I'm not going to repeat those points. Instead, I want to note that scalping is not an activity that is limited to tickets to concerts or sporting events. It can happen whenever the price is set too low, leading to a shortage. For example, I've written before about scalping of Ontario camping sites. And now we have the example of Girl Scout cookies. As reported in the New York Times last month:
Samoas, Trefoils and Thin Mints, move over. A new Girl Scout cookie flavor, Raspberry Rally, is in such high demand that, after swiftly selling out online, boxes are now being peddled for far higher prices on resale websites.
Single boxes of the cookies, which have a crispy raspberry-flavored center coated in chocolate, cost from $4 to $7, but they are selling for as much as five times the usual price on the secondary market.
Girl Scouts of the U.S.A. has expressed dismay over the situation. The organization said in a statement that most local Girl Scout troops had sold out of the “extremely popular” Raspberry Rally cookies for the season and emphasized that it was “disappointed” to see unauthorized resales of the flavor.
“While we are happy that there’s such a strong demand for our cookies year over year,” the Girl Scouts said, “we’re saddened that the platforms and the sellers are disregarding the core mission of the cookie program and are looking to make a profit off of the name without supporting our mission and the largest girl-led entrepreneurship program in the world.”
The third-party sellers have “deprived” troops of valuable experience and of proceeds that fund “critical programming,” the organization said. The organization encouraged people to support Girl Scout troops by purchasing one of the many other available flavors.
The Girl Scouts have this exactly wrong. The resellers are not depriving the Girl Scout troops of anything. The resellers bought the cookies from the Girl Scouts legitimately, at the price that the Girl Scouts set for their cookies. If anyone deprived Girl Scout troops of proceeds to fund critical programming, it is the Girl Scouts themselves. They should have set the price higher, and they would have made more profits from the cookies. The actions of the resellers of cookies demonstrates this clearly. If the Girl Scouts had set the price higher initially, at a price that equalised the quantity demanded with the number of cookies available, there would be no profit opportunity for the resellers to exploit.
To reiterate, scalping (including the scalping of Girl Scout cookies) represents an expected market response to a good that was initially priced too low. From the article:
For more than a century, the Girl Scouts have been holding annual cookie sales to raise money for troop activities while helping scouts learn skills like marketing, goal-setting and budgeting.
Maybe they should be helping the scouts to learn about pricing as well?
[HT: Marginal Revolution]
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