Shakespearean Economics

Every year, Washington, D.C.'s Shakespeare Theater Company puts on a free public performance featuring a stellar cast. In previous years, anybody who wanted a free ticket had to line up early. This year there will be an online lottery system to avoid long lines in the sweltering heat. The Pacific Legal Foundation's Timothy Sandefur explains what the whole thing reveals about basic economics:

They say on their website: "To enter the Free For All Lottery…Visit this page between midnight and 1 p.m. on the day of the performance. The lottery closes precisely at 1 p.m. You will be notified via email if you have been selected…."

Now, is this fair? A lot of people favor doing things this way rather than selling things because they think it's more fair than selling the tickets. But there's nothing fair about it—in fact, you're still basically selling the tickets, but for time instead of money. You're selling tickets to people who have the time to line up (or get on the website at the right time). People who have other obligations are out of luck. That system certainly does not get the tickets to those who ought to have the tickets—it gets them to the people who are able to stand around all day in line, or fool around on their work computers. That is not fair.

So we're left with the last alternative—a market economy. That is, an auction system. You sell the tickets. Then the people who want to go to the theater can decide for themselves how much they're really willing to invest in seeing the play. You eliminate from the crowd those people who don't really want to go that badly. The tickets go to those who place the highest value on them. In fact, no matter what you do, people are going to sell them anyway. If you randomly hand out the tickets both to those who do, and those who don't want to go to the theater, those who don't want the tickets will end up selling their tickets to those who want them really badly. This will happen even if you make it illegal to sell tickets—a black market.

Read the rest here.