Price Caps by Matching Platforms: The Case of Ticket Resales.

This article investigates the voluntary adoption of price caps by ticket resale platforms, analyzing their incentives and impacts on prices, sales, platform profitability, and welfare using a two-sided matching model with heterogeneous sellers. It identifies three regimes of price caps—nonconstrained, mild, and stringent—and shows that while mild caps lower prices and benefit buyers, stringent caps can exclude high-value sellers, reduce competition, and paradoxically increase average prices and platform profits, ultimately harming consumers. The study extends to multiple seller types, endogenous commission rates, buyer entry decisions, and dynamic markets, confirming the robustness of these findings. Managerial implications highlight that stringent caps are more profitable in markets with low buyer-to-seller ratios and moderate seller outside options, often corresponding to less popular events. The results caution policymakers that price caps on digital resale platforms may have unintended adverse effects on consumer welfare despite intentions to protect buyers.