Madonna gives thumbs up to ticket touts

I see secondary markets as simply another way of allocating tickets. There is a fixed supply of tickets and a greater-than-supply quantity of demand so one can either allocate tickets to those first in a queue or to those who are willing to pay more.

In a static model with zero transaction costs, auctioning off the tickets would probably be the most “efficient” method (in that tickets go to those who are willing to pay the most for them) and one that generates the most revenue (you’re minimising consumer surpluses through price discrimination). However, that doesn’t take into account of the dynamic effects of moral outrage (there is an equity argument that only the richest will be able to afford tickets) and decreasing fan support (and therefore revenue through merchandise) if you minimise consumer surplus.

I haven’t actually thought about your “changing circumstances” argument before but that is another good one for secondary markets.

Another way of allocating tickets which I neglected to mention is the random allocation (ie. a raffle). Some events are already using this method (Live 8) but these are usually for non-profit organisations since it’s very unpredictable how successful your pricing strategy will be with regards to pricing the raffle ticket, the probability of winning, and how many people you expect to participate. The drawback is that it often leads to another secondary market since this method is so inefficient (as tickets don’t go to those who value it most), unless you enforce draconian measures such as ID-attached tickets, etc. If you ban people from buying more than one ticket than the inequality argument is extinguished (re: certain states in America which allocate school places by lottery), but that does also go against the idea of a raffle and doesn’t generate as much revenue either.