Why Popcorn Costs So Much at The Movies

by on May 23, 2008 at 11:07 am in Books | Permalink

That’s the title of the new microeconomics book by Richard McKenzie.  Here is a book trailer on YouTube.  The subtitle is: "And Other Pricing Puzzles."

I am a fan of this book and I wrote a blurb for it.  It is popular economics but it is more extended microeconomic reasoning than most of the other popular economics books.

1 M May 23, 2008 at 11:00 am

I think this genre should be called “Popcorn Economics”. Both because of this popular example and becuase it’s light and fluffy and I tend to “snack” on it inbetween reading other things.

2 Rex Rhino May 23, 2008 at 12:42 pm

But do the theatres/stadia/airlines/etc. have to be so shameless in their pricing?

If you are talking about movie theaters, most make their profits from concession. Just showing movies isn’t that profitable.

I think the decline of the art-house movie theater in many places has to do with the fact that the type of people who like seeing art films in the theater, find big buttery buckets of popcorn distasteful and declasse.

3 Sean May 23, 2008 at 1:05 pm

How does this book’s explanation compare to Landsburg’s chapter on the same in the Armchair Economist (all the way back in 1995)?

4 8 May 23, 2008 at 2:57 pm

I think the decline of the art-house movie theater in many places has to do with the fact that the type of people who like seeing art films in the theater, find big buttery buckets of popcorn distasteful and declasse.

The theater needs a liquor license and an intermission.

5 kurt May 24, 2008 at 11:13 am

Grant, my hunch would be that popcorn pricing doesn’t enter the equation when a movie company also owns the theatres where they will show their movies. The current system is of course better, because a theatre will not only show movies from studio A, but also from studios B, C & D, giving the consumer more movie options to see. Remember, you don’t have to buy any popcorn.

6 Shaun M May 24, 2008 at 12:23 pm

My first ever job was working at the local mega cineplex in the mid 90’s (10 screens in those days was considered large). The particular location I worked was the company’s only one in the entire region and we were one of the top three in terms of profit per customer, at the time around $2,12 per person if memory serves. Almost all the theatre’s profits came from popcorn. Ticket revenues almost all were returned to the studio/distributors and the 25 cents that we kept didn’t even cover costs. Sodas were very low margin items and alone would not make the theatre business profitable. Popcorn kernels are cheap to buy and easy to store. Unlike other food items such as soda, candy, or ice creame, where we traded in part on the name of the brand, which the firms used to increase costs and lower margins, popcorn has no such associated costs. Towards the latter part of my work there, they added a “bulk” candy apparatus, for lack of a better term, and positioned it prominently in the lobby area, again because this candy was not sold as a brand was a far higher grossing product.

7 GVV May 24, 2008 at 1:23 pm

The best micro text which is not popular and which uses an axiomatic unusual explanation of micro principles is the one by Vivian Walsh (published long ago).

8 brian May 25, 2008 at 2:52 pm

Here’s another movie-related question that I think is more interesting:

Why do movie theaters charge the same price for all their movies, instead of charging more for the blockbusters (which will have more demand and I’m sure will cost more to get the rights to play the film) than for duds? Market mechanisms seem to be replaced somewhat by firm-level control here. (I can’t help but be reminded of Ronald Coase).

9 SheetWise May 26, 2008 at 10:08 pm

Why do movie theaters charge the same price for all their movies, instead of charging more for the blockbusters (which will have more demand and I’m sure will cost more to get the rights to play the film) than for duds?

This may be to keep one constant in the equation, so that attendance metrics are not biased.

10 抓漏 December 3, 2008 at 10:38 pm

Many people now use the Internet to do business, after receiving the business should be the best as far as possible, to allow customer satisfaction. But some Internet companies, not to start on your money to begin with, so on and then close the first half, resulting in Juankuan flee. Not only did not complete 租車the project, customers would also like to once again spend money and time to decoration. Dear Customer: This is no guarantee as the company not to find the.

Comments on this entry are closed.

Previous post:

Next post: