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Discussion: Supply and Demand for Super Bowl Tickets

This course was recently redesigned, but there used to be a discussion board topic each week in ECO-201. I thought some of you might benefit from seeing the discussion board topic that was previously used in this module. Below is the discussion board topic for week 2, which is followed up with an explanation.

How often are you able to buy a ticket to the Super Bowl at face value? Consider the prices you would pay online or through a ticket scalper. How can the laws of supply and demand be used to explain this situation? How is the market for Super Bowl tickets different than other goods and services we purchase? What role do ticket scalpers play in this process?

First let’s quickly define the following terms:

Law of supply: The rule that, holding all else constant, increases in the price cause increases in the quantity supplied, and decreases in price cause decreases in the quantity supplied.

Law of demand: The rule that, holding everything else constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of a product rises, the quantity demanded of the product will decrease.

Market Equilibrium: A situation in which quantity demanded equals quantity supplied. This is where the supply curve and the demand curve intersect.

Getting back to the topic, we know that tickets to the Super Bowl are a hot commodity. Unless you have good connections, you are unlikely to be one of the people offered Super Bowl tickets at face value. Why? Because the face value of a ticket to the Super Bowl is set so far below the market equilibrium price, that a shortage is created at face value. A shortage occurs when the quantity supplied is less than the quantity demanded at that price point. There is a good picture on page 114 of your text of a shortage. Thinking back to the law of demand, as the price decreases, the quantity demanded increases, which is why the quantity demanded of Super Bowl tickets is so high at face value.

Moving on, we also want to know why the market for Super Bowl tickets is different from other goods and services we purchase every day. To answer this, we should take a look at the supply of Super Bowl tickets. The supply of Super Bowl tickets is different than the supply of most other goods and services because the quantity of tickets supplied is fixed, based on the seating capacity of the stadium. The supply curve is a vertical line, rather than the upward-sloping supply curve that we are used to seeing.

Finally, let’s discuss the secondary market for Super Bowl tickets and scalpers. The role that scalpers play is to buy up tickets early and make a profit by allocating the tickets to those who are willing to pay higher prices (closer to market equilibrium price). Scalping comes with an element of risk as well; if they set the price above what the market will bear and end up with unused tickets, scalpers lose money on those tickets.

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