The war over so-called Price Gouging
Readers will excuse me for prompting them to delve into their pandemic memory hole, but isn’t it glad to be able to enjoy big events again? Taylor Swift bringing in £1bn to London’s nightlife economy is no surprise, with so much pent-up demand following almost two years (even if some time ago) of being locked indoors. Today, we saw the outcome of a similar flurry of interest - Oasis tickets go on sale. Brace for the coming debate over price gouging, laying in the background of previous Parliamentary debates and in the US with Kamala Harris’ proposed reforms.
Oasis’ return will see a new era in BritPop, a mix of nostalgia paired with new innovations in the performing arts. Safe to say, social media has been going wild in excitement - but something piqued my interest. The jokes about ‘who is going to remortgage their house’ to afford tickets are a meme shared by die-hard fans who have learned the hard way that resales are common.
For those unfamiliar with the reselling market - high-intensity ticket buying (often automated) is common amongst the most popular artists’ fan bases. Within the first few minutes, lines of code and hyper-organised punters will have purchased all of the available tickets, only to turn to a secondary market worth up to $2.82bn a year according to Statis Research. Tickets would return to organic fans at multiples of the price. However, this should be welcomed, rather than banned.
‘Price gouging’ is a necessity - it reflects the true price (and thus, demand) for a very limited product. 90,000 seats at Wembley may sound like a lot, but for a band like Oasis who have sold 75 million records worldwide, it is not nearly enough to facilitate equitable demand. In order to correct for this, selling (or re-selling) at higher prices will ensure that future concert holders will be able correct pricing and maintain the financial viability of their performances, and incentivise even more shows. It also discourages hoarding by some punters, who may seek to get early, cheaper tickets in order to fork them out at lower rates to friends and family - they are free to do so, but it’s fairer if everyone has a good shot.
There will be calls for price controls and regulations on ticket pricing after Saturday. Kamala Harris’ government has already touted price controls to counter “corporate greed”, and given the political osmosis between the UK and US, we can expect such battles to be touted here. But, as my colleague Dr Eamonn Butler has pointed out, evidence from 40 centuries of history shows that price controls never work. They limit supply further, create dangerous black markets, and significantly harm consumers just looking to spend their money as they please. From rent controls to energy price caps to tickets, the Invisible Hand of the market is immutable.
Policy makers have a duty towards consumers to act in a free market, where, yes prices may be uncomfortable, but at least they are right. They should avoid imposing additional regulations and controls on prices, and deafen themselves to grumpy concert-goers about parting with their money to enjoy a concert they wish to pay exorbitantly for. Price controls are straight from the economics black-book. Pure Blunderwall.
