Scalping and insider trading

The Cubs, who play mostly day ball in tiny Wrigley Field, are one of the hottest baseball tickets in the country. This is bittersweet irony given my teen and childhood recollections of going to Cubs games whenever I wanted with no advance purchase, and of advertisements for “picnics” in beautiful Wrigley Field that hardly mentioned baseball.

There are local laws in Chicago, as elsewhere, prohibiting scalping. Here you can read about the recent legal history that now lets the Cubs skirt this law by scalping its tickets through a separate company. Thanks to Marginal Revolution for the link.

Why have these laws? Is there something “unfair” about scalping, because only the rich could get in? But nothing prevents the Cubs from charging more. Maybe the Cubs want to control the demographics of their fan base. The laws gives the Cubs public enforcement of this business objective, since private enforcement by the Cubs might be impracticable.

This sounds a little like insider trading. The federal securities laws in effect prevent theft of information from firms. But this shouldn’t prevent firms from “licensing” insider trading for their own benefit, such as to compensate insiders (as Henry Manne famously argued), just as the Cubs did with their tickets. Note that this is a far cry from the SEC's rhetoric about fairness that justifies broad and strictly enforced insider trading laws. See my article, Federalism and Insider Trading, 6 Supreme Court Economic Review, 123 (1998).