Why does popcorn cost so much at the movies?


Because it’s smarter to raise popcorn prices than ticket prices:

Prices for goods such as blades for razors, ink for printers and concessions at movies are often set well above cost. This paper empirically analyzes concession sales data from a chain of Spanish theaters to demonstrate that high prices on concessions reflect a profitable price discrimination strategy often referred to as “metering price discrimination.” Concessions are found to be purchased in greater amounts by customers that place greater value on attending the theater. In other words, the intensity of demand for admission is “metered” by concession sales. This implies that while some consumers’ surplus may be reduced by the high concession prices, surplus of other consumers on the margin of attending may increase from theaters’ decisions to shift their margins away from movies and toward concessions.

Source: “Why Does Popcorn Cost So Much At the Movies? An Empirical Analysis of Metering Price Discrimination” from Stanford Graduate School of Business Research Paper Series

Also, theaters have to share ticket revenues, but not concession cash, with the studios.

Join over 320,000 readers. Get a free weekly update via email here.

Related posts:

New Neuroscience Reveals 4 Rituals That Will Make You Happy

New Harvard Research Reveals A Fun Way To Be More Successful

How To Get People To Like You: 7 Ways From An FBI Behavior Expert

 


Tags:
Posted In:
Post Details