Published and Accepted Papers
Resale, Refunds, and Demand Uncertainty: Evidence from College Football Ticket Sales
Accepted at the RAND Journal of Economics
When is resale valuable? And when can it be replaced with refunds? I study common aftermarket policies in perishable goods markets with demand uncertainty. Using primary and resale market data on college football ticket sales, I estimate a structural model comparing resale, which has flexible prices but incurs frictions, to a partial refund scheme, which is centralized but has rigid prices. In the model, consumers anticipate shocks when making initial purchases, then engage in resale after shocks are realized. Because of resale frictions, refunds are more efficient on average. However, flexible prices make resale more efficient after large aggregate shocks.
Web Appendix
Bundling with Resale
Journal of Industrial Economics, December 2022
How does resale affect multiproduct bundling? I investigate using a model of monopoly bundling with costly resale. Consumers purchase in the primary market while anticipating resale, then participate in a resale market with market-clearing prices. Resale forces the monopolist to balance the additional profit from a discounted bundle against the opportunity for consumer arbitrage. In equilibrium, the monopolist may still offer a discounted bundle, but resale reduces the returns to bundling and has an ambiguous effect on consumer and total welfare. When consumers have heterogeneous costs of resale, it is possible for consumers to resell in equilibrium.
Working Papers, and/or Collections of Ideas I'm Not Sure What To Do With
Optimal Resale Policies: Third-Party Resale, Integrated Resale, or Replace with Refunds?
(Preliminary and Incomplete)
By offering refunds, ticket sellers can reallocate tickets to high-value consumers while avoiding fees paid to third-party resale platforms. So why do ticket sellers overwhelmingly allow refunds, and why have some integrated with the resale market? Using a model in which a capacity-constrained seller with rigid prices makes sales over two periods, I show that third-party and integrated resale outperform refunds when the average consumer value is uncertain. Specifically, I reach three conclusions. First, third-party resale is more profitable than refunds when there is significant aggregate uncertainty and resale fees are relatively low. When there is significant aggregate uncertainty, the seller's primary market prices may be suboptimal. It benefits from resale because resale's flexible prices adjust to reallocate tickets from low- to high-value consumers. But with little uncertainty or high fees, refunds can be better because they avoid paying fees to the resale market. Second, integrated resale offers the seller complete protection from demand uncertainty. By selling to brokers, the seller earns as much as if it could freely adjust its prices and the refund offered to early buyers. Third, consumers benefit from integrated resale and refunds when the number of consumers buying in the second period increases. The findings explain why ticket sellers have deepened ties with resellers and provide guidance on when resale is valuable and when sellers should prefer alternatives.