13
Jun
2015
Steve Landsburg Has Still Got It
In the last two weeks I have met two young’ins who volunteered to me that they are reading Landsburg’s The Armchair Economist. Ah, I fondly remember when I had just graduated from college and read Steve’s book. Not many people know why movie theaters charge so much for popcorn, but those two young’ins soon will.
“Not many people know why movie theaters charge so much for popcorn”
-To make more money?
There’s a movie theatre I go to on occasion that has a bar and sells alcohol. The same building also has a bar in the basement that isn’t a movie theatre, it’s just a bar, and (you could probably guess) the basement prices are significantly cheaper.
Last time I had a beer at the movie theatre bar, while waiting for my movie, I noticed I was the only one drinking, and the single barmaid (who was running the whole bar) was so bored she almost nodded off. I only bought two beers that night and I don’t go there often. Unless there were some excellent parties that I missed out on, that movie theatre bar doesn’t break even.
I’m not sure anyone *knows* why movie theaters charge so much for popcorn. There is a plausible economic explanation, which appears in my _Price Theory_ and, I presume, in Steve’s book. In Chapter 10 of _Price Theory_, I sketched a way in which one could test that explanation against an alternative one.
Your father once posited that it was because Michael Moore keeps depleting the supply.
Price discrimination is probably the answer, as you say, but you suggest in the book that some movie theaters may have a monopoly, ignoring the more significant source of monopoly power: copyright. The theaters are price discriminating primarily for the benefit of the copyright holders, not for themselves.
I would think that, as well as the movies are shown in certain theaters first.
The cheaper theaters (with cheaper popcorn) get the movies later.
Landsburg’s book is great, and sui generis, but one of the few questions that he left up in the air was the popcorn-in-theaters question! None of the possibilities he explored gave a satisfactory answer. At least, that was his conclusion.
Isn’t it the same reason theme parks charge more soda and bottle water? For concessions in general actually.