By MARY PILON
Can the dying world of baseball card conventions provide a lesson in economics?
The long-dwindling gatherings of card dealers peddling mint-condition
Joe DiMaggios and Stan Musials are good examples of what economists call
two-sided markets, according to a new working paper from the National
Bureau of Economic Research.
Card conventions proliferated through the 1980s and 1990s, as did the
production of baseball cards. Only a few large shows remain as much of
the card-collecting industry has moved online.
The economists who wrote the paper
— Ginger Zhe Jin of the University of Maryland and Marc Rysman of
Boston University — examined data on card conventions from 1989 to 1997,
a period that included more than 50,000 conventions across the country.
The researchers hoped to look at the market pre-Internet, minimizing
the effect of sites like eBay.
Jin and Rysman determined that conventions were useful for exploring
price theory in two-sided markets — those that involve two (or more)
groups of actors in which actors both act through an intermediary and
participation of each group affects the other group. (Other examples:
yellow pages, credit cards, Web sites used to book flights.)
In the case of sports card conventions, there are consumers seeking to
buy cards and dealers hoping to sell cards for the best price, with the
convention acting as an intermediary.
The more conventions there are in an area, the lower the admission is
for consumers, the economists determined, as competing conventions drive
down the ticket price. Generally, the larger the convention, the higher
the table fee a dealer paid, with costs ranging from $25 a table to
thousands of dollars.
“The Internet has killed these shows,” Jin said. “The Internet made it
an everyday convention for dealers, and there’s little point in going to
a physical convention. The big ones are still out there, but for the
small shopping mall conventions with 10 tables, that was it.”
That may make the research feel more like an archeological study than an
analysis of current trends. But Jin said their hope was that the
research might be used to confirm existing models of two-sided markets
for economists.
“These models are much more general and applicable to many two-sided markets beyond sports,” she said.
David Hobson, a baseball card dealer based in Minneapolis, said he
recognized that conventions were two-sided markets. But conventions have
inefficiencies, he said, like dealers’ lugging tens of thousands or
hundreds of thousands of dollars’ worth of cards around the country and
being limited to the smaller pool of convention-goers rather than the
larger pool of anyone with Internet access.
“Dealers today have to act as their own auction houses,” he said.
While sites like eBay may charge sellers a listing fee, market structure
is difficult to define online, the researchers said, thus diminishing
it as a pristine example of two-sided markets. Further, the decline of
small-scale conventions offer fewer variations in market structure.
Then there is supply and demand, said Nick Redwine, the owner of Nick’s
Sports Cards in Dallas. He said he had not been to a card convention in
decades and did not sell or purchase cards online. In spite of the rise
of Internet sales, he said “these last five years of business have been
the best for us.”
He added: “A baseball card is a collectible. Is it subject to supply and demand? Yes.”
Redwine’s theory is that not only has he benefited from being able to
scoop up business that used to belong to other, smaller competitors, but
he specializes in rare, vintage cards and his customer base is now
reaching another generation. More consumers, fewer cards.
“The kids that grew up in our store, well, they’re coming back and bringing their kids into the hobby,” he said.
“People say that cards are dead and I think, no, they’re not,” Redwine
said. “They’re alive and well, but the dealers went online and there are
fewer conventions.
“Things change. It’s economics.”
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