Source: Fortune
Summary
Wharton professor Judd Kessler argues that hidden markets, where demand exceeds supply and prices are kept artificially low, are a common phenomenon in modern life. These markets often involve queuing, lotteries, intermediaries, and perks, and companies profit from the resulting friction. Kessler cites examples such as concert ticket sales, restaurant reservations, and Disney theme park experiences. He suggests that consumers can navigate these markets more effectively by understanding their rules and “settling for silver” – targeting less crowded but still desirable options.
Our Reading
The numbers tell one story. Companies like Ticketmaster and Disney are using hidden markets to profit from excess demand. The real allocation happens offscreen, where prices are kept artificially low and companies profit from the resulting friction. The strategy enters a familiar phase, where companies create systems that seem fair but actually favor those willing to pay more. The announcement sounds familiar, as companies use tactics like price discrimination and intermediaries to monetize hidden markets.
Disney’s theme park experiences are a prime example of hidden markets, where the company uses various pricing structures and options to create a sense of scarcity and exclusivity. The company’s focus on the upper class and use of nostalgia to extract more money from die-hard fans risks alienating young families. Kessler’s work suggests that consumers can navigate these markets more effectively by understanding their rules and “settling for silver.”
Author: Evan Null
