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Live Nation Violated Antitrust Laws

EconEye Admin

A federal jury found that Live Nation, owner of Ticketmaster, acted as a monopoly, overcharging $1.72 per ticket. It pressurized venues to use Ticketmaster for ticket sales. It controls 70% of government-identified major venues and 86% of ticket sales. A breakup may be proposed.—nytimes.com

Answer the following questions to check your understanding of the story.

Who are the main players in the live event ticket market?

Wrong! - Producers, wholesalers, and retailers describes a typical goods supply chain. Governments, firms, and households refers to broad economic agents. Exporters and importers relates to international trade, which is not relevant to the live event ticket market.

Good Job! - Concert promoters organize shows, venues host them, and ticket sellers sell tickets to consumers. Ticketmaster is the ticket seller and Live Nation is the concert promoter.

About 86% of tickets at major venues are handled by Ticketmaster. What contributed to such a large market share?

Wrong! - Predatory pricing means low prices, but prices were high. Tying differs from restricting venues’ choice of ticket sellers. Market share increased due to forced use of Ticketmaster, not product differentiation.

Correct! - Exclusive dealing forced venues to use Ticketmaster, restricting competition and increasing its market share.

What type of market structure best describes the live event ticket market?

Wrong! - Perfect competition and monopolistic competition requires many small firms. The market is not a monopoly because competitors like AEG exist.

Well Done! - Exclusive dealing created barriers to entry, allowing Ticketmaster to capture a large share of the market, consistent with an oligopoly.

Why was an antitrust case brought against Live Nation?

It first __________ and then _________.

Wrong! - Elastic demand limits a firm’s ability to raise prices. A firm that loses market power cannot influence the price it charges. Driving out rivals through low pricing refers to predatory pricing, not exclusive dealing.

Excellent! - It gained market power through exclusive dealing and used it to overcharge consumers.

How would breaking up Live Nation and Ticketmaster affect the market?

Live Nation’s market power would __________ and competition would __________.

Wrong! - Breakup reduces market power and increases competition.

That's Right! - Breakup reduces market power and allows venues to choose freely, increasing competition.

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