Movie prices

Interesting post by Derek Thompson discussing the fact that all movies are priced the same.  Doesn’t really make a lot of economic sense when you think about it:

Like tens of millions of Americans, I have paid money to see Mission: Impossible, which made $130 million in the last two weeks, and I have not paid any money to see Young Adult, which has made less than $10 million over the same span. Nobody is surprised or impressed by the discrepancy. The real question is: If demand is supposed to move prices, why isn’t seeing Young Adult much cheaper than seeing Mission: Impossible?

There’s a lot of interesting discussion of dynamic pricing in a movie theater context and 5 suggestions on why we nonetheless have uniform pricing.  I found these two most interesting:

3) Price can repel as easily as it attracts, because it’s a signal of quality. If you’re a theater showing one movie for $6, one movie for $10, and another for $12, perhaps fewer people will see the $6 movie because they assume it’s garbage.

4) Cheaper tickets lead to higher policing costs. I’m a cheapskate, so I might buy a ticket to see cheap, cheap Iron Lady and sneak into Sherlock Holmes. This would create a fascinating incentive for art-house studios to release smaller, cheaper films the same weekend as blockbusters, knowing that thousands of canny consumers might buy fake tickets to their show to sneak into the more expensive blockbuster.

Would be interesting to see highly-monitored movie theaters.  Though, shouldn’t cost that much to simply station an usher at each auditorium.  Though not particularly related to this main discussion, I was quite intrigued by this chart of average weekly attendance through the year.  Not coincidentally, I talked to a bunch of people this week who had seen more than their fair share of movies recently.

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About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

2 Responses to Movie prices

  1. itchy says:

    I always wondered this about music, too. As with everyone, there are some albums I’ve purchased that have been worth hundreds of dollars to me. Others have been worthless. But they always tend to be priced similarly.

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