Probit Model for Trans-State Theatre-Ticket Sales

Abstract

Do ticket-scalping laws affect the sales of tickets resold online? Currently, many states have laws regarding ticket resale while no federal law exists governing the resale of tickets across states. Due to the spread of the internet, state laws can be circumvented by making transactions online. According to economic theory, the impact of ticket scalping on producers and society is ambiguous. On one hand, scalpers may collect profits that would otherwise go to theater companies. On the other hand, the presence of scalpers may act as a form of ?insurance? to producers, and the presence of scalpers may improve social welfare by providing a market for last minute sales that could not otherwise exist. By examining the sales of theatre tickets on eBay, I study the impact of scalping laws on the probability that a ticket is sold out-of-state. I apply an econometric model that examines the impact of key variables on the likelihood that a ticket is sold out-of-state vs. in-state. The independent variables encompassed the number of days before a show a ticket was sold, the capacity of the venue at which the show occurs, and the legal variables important to testing my hypotheses. I find that that laws that require a license to sell tickets are associated with more online tickets being sold out-of-state, suggesting that online transactions may be made to avoid regulations within states.