Scalper

Scalper Speculation Ticket Scalping Profit Reselling Market Manipulation Event Tickets
A scalper is a speculator who enters into quasi-legal or illegal transactions to turn a quick and sometimes unreasonable profit by reselling items at a higher price.
On this page

Scalper

Definition

A scalper is a speculator who engages in quasi-legal or illegal transactions with the intention of making a quick and often unreasonable profit. Scalpers typically buy items at regular prices and later sell them at a much higher price when the demand exceeds the supply.

Examples

  1. Ticket Scalping: A common example of scalping is purchasing tickets for a major theatrical or sporting event at regular prices and reselling them at inflated prices once the event is sold out.
  2. Stock Market Scalping: In financial markets, scalpers may buy large volumes of stocks with the intention of selling them quickly at a slight markup, often executing multiple trades in a single day.
  3. Product Scalping: During high-demand product launches, such as limited-edition sneakers or the latest gaming consoles, scalpers purchase as many items as possible and resell them at a premium.

Frequently Asked Questions

Q1: Is scalping legal? A1: Scalping is a gray area; it is legal in some jurisdictions but may be regulated or illegal in others. For instance, ticket scalping is illegal in many places unless done through authorized channels.

Q2: How does scalping impact markets? A2: Scalping can distort markets by reducing accessibility and inflating prices, often making it difficult for average consumers to purchase the product or service at its intended price.

Q3: Why do people use bots for scalping? A3: Bots can be used to quickly purchase high-demand items online faster than a human can, increasing the chances of securing a large quantity of the items for resale.

Q4: Are there consequences for scalping? A4: In places where scalping is illegal, individuals caught engaging in scalping can face fines, legal action, or imprisonment, depending on the severity and jurisdiction.

  • Arbitrage: The simultaneous buying and selling of securities, currency, or commodities in different markets to take advantage of differing prices for the same asset.
  • Market Manipulation: Actions taken to artificially influence the price or supply of a product or service, often through deceptive or unethical means.
  • Resale Price Maintenance (RPM): A practice where a manufacturer and its distributors agree on the price at which a product will be resold.

Online References

  1. Investopedia: Scalping
  2. Wikipedia: Ticket Platform
  3. U.S. Securities and Exchange Commission: Investor Bulletin: New SEC Rules to Enhance Market Resiliency and Address Market Manipulation

Suggested Books for Further Studies

  1. The Basics of Scalping by Michael Harris - A comprehensive guide to understanding scalping in financial markets.
  2. Ticket Masters: The Rise of the Concert Industry and How the Public Got Scalped by Dean Budnick and Josh Baron - An in-depth look at the ticket scalping industry.
  3. The New Financial Capitalists: Kohlberg Kravis Roberts and the Creation of Corporate Value by George P. Baker and George David Smith - Provides insight into various financial manipulations, including scalping practices.

Fundamentals of Scalper: Business Law and Marketing Basics Quiz

### Is scalping always considered illegal? - [ ] Yes, scalping is illegal everywhere. - [x] No, the legality of scalping depends on the jurisdiction. - [ ] Scalping is legal only during certain hours. - [ ] Scalping is legal for products but illegal for tickets. > **Explanation:** Scalping legality varies by jurisdiction. Some places have strict laws against it, especially for tickets, while others may have few or no regulations. ### What is the primary goal of a scalper? - [ ] To hold long-term investments. - [x] To make a quick profit. - [ ] To stabilize the market. - [ ] To distribute goods evenly. > **Explanation:** The primary goal of a scalper is to make a quick profit by reselling items at higher prices shortly after purchasing them. ### Which of the following is often a target for scalpers? - [x] Event tickets - [ ] Daily groceries - [ ] Used textbooks - [ ] Services like haircuts > **Explanation:** Event tickets are often targets for scalpers because they are time-sensitive and can become highly valuable when the event sells out. ### What tool do scalpers commonly use to purchase high-demand items quickly? - [ ] Credit cards - [x] Bots - [ ] Social media - [ ] PayPal > **Explanation:** Scalpers often use bots to quickly purchase high-demand items online, increasing their chances of securing a large quantity before the items sell out. ### What does market manipulation mean? - [x] Artificially influencing the price or supply of a product or service. - [ ] Setting up multiple stores to sell products. - [ ] Offering discounts to boost sales. - [ ] Adjusting market hours for convenience. > **Explanation:** Market manipulation involves actions that artificially influence the price or supply of a product or service, often through deceptive or unethical means. ### How does scalping affect average consumers? - [x] Reduces accessibility and inflates prices. - [ ] Stabilizes the market and lowers prices. - [ ] Increases competition among sellers. - [ ] Has no significant impact. > **Explanation:** Scalping affects average consumers by reducing accessibility to the product or service and inflating prices, making it harder for them to purchase at the intended price. ### Which practice involves simultaneous buying and selling in different markets to take advantage of price differences? - [ ] Scalping - [ ] Reselling - [x] Arbitrage - [ ] Leasing > **Explanation:** Arbitrage is the practice of simultaneously buying and selling in different markets to take advantage of differing prices for the same asset. ### Can anyone sell items at higher prices without facing consequences? - [ ] Yes, it's entirely up to individual discretion. - [x] No, there are regulations and laws that might restrict such activities depending on the jurisdiction. - [ ] Only businesses can do so legally. - [ ] If items are sold online, there are no consequences. > **Explanation:** Laws and regulations vary by jurisdiction, but individuals can face consequences for reselling items at higher prices, especially if it constitutes scalping in a regulated market. ### How are resale price maintenance agreements usually structured? - [ ] By giving consumers discounts. - [ ] By inflating prices massively. - [x] Through agreements between manufacturers and distributors on product resale prices. - [ ] By cutting out middlemen. > **Explanation:** Resale price maintenance (RPM) involves agreements between manufacturers and distributors setting the resale prices of products. ### Why might scalping be particularly disruptive during product launches? - [ ] It reduces consumer anticipation. - [ ] Helps merchants manage stock levels. - [x] Scalpers purchase large quantities, reducing product availability for regular consumers. - [ ] Ensures widespread distribution. > **Explanation:** Scalping can be disruptive during product launches because scalpers often purchase large quantities of a product, reducing availability and inflating prices for regular consumers.

Thank you for exploring the important aspects of scalping and testing your knowledge with our comprehensive quiz. Continue your learning journey to stay ahead in the dynamic fields of business and marketing!

Wednesday, August 7, 2024
Scalpers
Scale Relationship

Accounting Terms Lexicon

Discover comprehensive accounting definitions and practical insights. Empowering students and professionals with clear and concise explanations for a better understanding of financial terms.