Why Do Theaters Charge the Same Prices for Different Films?

January 5, 2012 in Daily Bulletin

Why does a movie ticket for the summer’s biggest blockbusters and the smallest independent flick cost the same at the theater? Derek Thompson at The Atlantic offers four theories:

  • If movie theaters were known to cut prices a few weeks after the film hit the screens then customers would have an incentive to hold off on watching a movie for a few weeks. Therefore theaters avoid cutting the price of movie tickets for any one film over time.
  • Price is also a signal of quality. If you saw that one movie cost less than another, you might wonder about the cheaper film’s quality and avoid watching it.
  • If different movies had different prices then movie-goers may sneak into a more expensive screening after purchasing a ticket for a cheaper film.
  • Theaters don’t want to get into a price war with one another

To read more about how the economics of the movie theater have changed since 1929 as well as other interesting facts and opinions click here.

Source: The Atlantic

Via: Marginal Revolution