"Bru-u-u-uce": The simple economics of mob goods

✍ Scribed by Allan C. Serpa; Roger L. Faith

• Publisher: Springer US
• Year: 1996
• Tongue: English
• Weight: 759 KB
• Volume: 89
• Category: Article
• ISSN: 0048-5829
• DOI: 10.1007/bf00114280

✦ Synopsis

This paper provides a pure economic rationale for chronic excess demand for tickets to events like rock concerts. The model focuses on "mob goods", which are consumed jointly with crowd reaction, or "noise". Whereas the primary commodity is provided by the seller, the joint product is provided collectively by buyers. If propensities to make noise are inversely correlated with reservation prices and a capacity constraint applies, excess demand (queuing) is a necessary condition for profit maximization. One important implication is that anti-scalping laws may be welfare-increasing. The paper explores other applications in professional sports, restaurants, and on-stage theatre.