Many people enjoy going to music concerts, sports events, and theater productions. Tickets to see these events are often made available to the public only through primary ticket outletsorganizations that contract directly with venues and promoters to sell event tickets on their behalf. Such firms are monopolies. Ticketmaster Entertainment, Inc., which has operations in Australia, Europe, and North America, is one example. It has exclusive agreements with a large percentage of venues and its service fees constitute much of the ticket price.

(a) Suppose that an event promoter, also a monopoly, receives a guaranteed payment for the tickets it makes available to a primary ticket outlet. From the point of view of the promoter, what is the marginal cost of selling tickets? Would you expect the same result for the primary ticket outlet? If the primary ticket outlet is a profit-maximizer, how would it determine how many tickets to sell?

(b) Would your answer to part a be the same if the primary ticket outlet could perfectly price discriminate? Explain.

(c) What were the key problems with the sale of Taylor Swift's tickets last week?