Gregory Mankiw, the frequent New York Times contributor and Harvard economics professor, wrote a recent column about how he didn’t mind buying $2,500 tickets to “Hamilton” on StubHub, at least five times what the show’s creators wanted to sell the tickets for. To Mankiw, this is the law of supply and demand and, in the end, everyone benefits: The scalper gets some money, Mankiw and his family get to see the play last-minute. He writes:
[S]ome people might object to this price. Terms like “scalping” and “price gouging” are pejoratives used to demonize those who resell tickets at whatever high prices the market will bear.
Yet there is another way to view the situation. It was only because the price was so high that I was able to buy tickets at all on such short notice. If legal restrictions or moral sanctions had forced prices to remain close to face value, it is likely that no tickets would have been available by the time my family got around to planning its trip to the city.
He also chides Lin-Manuel Miranda for trying to prevent scalping bots.
In the past, Mr. Miranda has objected to the automated software that quickly buys as many tickets as it can, so they can be resold at a profit. But there is an easy way to put these resellers out of business: The theater can charge higher prices to begin with.
This is the usual defense of scalping, and one you’ve likely seen before.
So you may object to his argument, but rest assured: Gregory Mankiw is a person that believes in selling and reselling, the rough-and-tumble competition of both primary and secondary markets, which keep prices where they ought to be, without any manipulation. Greg teaches Principles of Economics, so it makes sense that he’s willing to let the market work and let folks exchange products as they see fit. Let’s jump over to The Harvard Crimson at the beginning of this semester to see how that’s affecting Greg’s classes.
Unlike in previous years, students in Economics 10: “Principles of Economics,” the foundational course for the Economics Department, cannot purchase used textbooks, which often offer a cheaper alternative to the new books. Instead, they must purchase access to the MindTap learning system, an online platform developed by the textbooks’ publisher
Huh, well maybe moving it online has reduced the high costs of producing a physical book and those savings can be passed on to the students.
[A] $132 access code to an online textbook and set of online materials
Well, that’s unfortunate, but at least students will be able to share access to that system or… what’s that?
The access will expire after 12 months, so students can not resell their textbooks, Mankiw said.
In summation: Entertainers limiting reselling and keeping ticket prices low to try to let people with limited income attend their shows is… bad. A professor restricting his textbook to a gated online system, then selling access codes that self-destruct so that they can’t be sold in order to keep prices artificially high is actually good. How good? According to The Oregonian:
Mankiw’s royalties on this book alone may exceed $42 million, supplemented by revenues from several other textbooks.