http://www.nytimes.com/2006/04/16/weeki ... ntain.html

The Price of Admission in a Material World
By HENRY FOUNTAIN

YOU just paid $153 at StubHub.com for a ticket to the July 3 Madonna concert at Madison Square Garden, more than double what it would have cost you at the box office. Did you get taken?

No, say many economists. Long gone are the days when most people paid face value by lining up at a stadium or theater box office. And even now, with online box offices, tickets sold at face value can go in minutes.

So a growing number of tickets are bought on the secondary market, which is estimated to be worth $10 billion annually. In the case of popular acts like Madonna, it can be practically impossible to buy tickets without resorting to a broker or an online site like StubHub or eBay, which act as marketplaces for individual or block sellers and buyers.

"It has gotten worse in a sense," said Stephen Happel, an economics professor at Arizona State University. Before reselling became popular, team owners and entertainment producers kept prices stable, refusing to raise them, say, on weekend nights or for more popular shows. "The old-time guys really worried about spoiling the market," Professor Happel said. "They didn't want to be viewed as price gougers."

But the industry has grown comfortable with the principle of supply and demand. Broadway shows like "The Producers" have charged a premium for some seats, and baseball teams often charge more for games against quality opponents. Even primary sellers like Ticketmaster auction premium seats for certain shows: minimum bids for that same Madonna concert were $380 to $800 at Ticketmaster.com. Brokers have long charged more for popular events. But sites like StubHub.com (which says about $200 million in tickets were sold at its site last year) and eBay allowed supply and demand to flourish.

Jeff Fluhr, StubHub's chief executive, said his site was "the embodiment of supply-and-demand economics." Mr. Fluhr said it provides "choice and availability that primary ticketing channels don't."

All of that comes at a price, though. While tickets can sell for less than face value for an event with little appeal, prices can also go through the roof (though Mr. Fluhr said that extremely high-priced tickets almost never sell until the price is reduced, and that the site has better deals than brokerages).

But in an age when the rich are getting richer, many people are willing and able to pay a steep price. "You have to expect with all the wealth people have, that you're going to have tremendous demand for Yankees tickets," Professor Happel said.

More than just supply and demand is at work. "You have a lot of people with a lot of money," said John Allen Paulos, a professor of mathematics at Temple University. "It's not surprising that they are going to take advantage of being able to easily buy tickets online."

For those people, there is an "opportunity cost" of doing business the old way. "It's one of the most profound ideas of economics," he said. "If you make a ton of money, an hour or two saved more than makes up for the money you are paying."

That doesn't mean that those with less money won't be mad. "The general puzzle is why people believe in just prices — why certain prices are right and certain are wrong," said David D. Friedman, a professor of economics and law at Santa Clara University, who doesn't see any justification for the outrage. "People have this intuition they are entitled to this price."

Part of that may be that people remember the days when ticket prices did not fluctuate. But for Professor Friedman the reason goes back further, perhaps to the days of the hunter-gatherers, when bartering was the norm and people knew the "usual" value of things.

Professor Happel said that brokerages and sites like StubHub offered a service to the risk-averse. They guarantee that the tickets are genuine and will arrive in time. "But the best way to protect fans and get the lowest-priced tickets over all," he said, "is to have a designated area where on game day you allow open trading."

Arizona allows for such reselling zones outside venues, where sellers and buyers can meet. In the zones, Professor Happel said, prices can drop as the starting time approaches. In the 2001 World Series between the Arizona Diamondbacks and the Yankees, he said, tickets for Game 6 could be had for half the face value.

Professor Happel can't fathom why New York, for one, doesn't have a similar law. "Isn't this the home of Wall Street?" he said. "Don't they understand that free markets are the best way to protect the consumer?"