For those of you that don't live in the Boston area, Ezra Dyer is a humor colunmist in a popular free magazine called The Improper Bostonian. I read this magazine regularly to find out what is going on about town, and I was happy to see that even Ezra uses economics to explain real-life events. In a (mostly sarcastic) article about the dodgy reputations of Red Sox ticket scaplers, he concludes with the following paragraph:
"The problem isn't opportunistic scalpers or the Red Sox's popularity. The problem is that Fenway Park needs 20,000 more seats- maybe the Yankees will let us take some from their old stadium, which they have the good sense to abandon. When standing room goes for $100 a ticket, something's seriously wrong with the supply/demand relationship. I write this on a Monday, and tonight Kason Gabbard pitches against the mighty Kansas City Royals. Of course, the game is sold out. Dude, it's the Royals."
Now, I applaud the effort, and Ezra is certainly correct in that the high prices are caused by market forces. However, it is important to understand that prices are never determined by supply or demand alone! (In other words, if the Red Sox weren't so damn popular then the ticket prices would be much less of an issue, even taking the small stadium as given.) In fact, the ticket prices have to do with all three of the things he mentions- the park size restricts supply, the popularity leads to high demand, and the scalpers provide a resale market so that the artificially low prices set by the Red Sox organization (probably for image reasons) cannot be maintained.
I really do love being able to combine my interest in economics with my other main interests...go Sox. :)
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