Friday, November 24, 2006

Why Do Movie Theaters Have Uniform Pricing?

Here's a puzzle: Why do movie theaters charge the same $9.50 for "Casino Royale" this Saturday night that they charged for the disappointing remake of "All the King's Men" on a Wednesday night in the middle of September?

Wouldn't they sell more tickets and popcorn, and make more profit, if they increased the price when demand is high, and lowered it when demand is low? (MP: That is, why don't they practice price discrimination instead of uniform pricing.)

After all, hotels and airlines have long varied pricing by day and season. And you'd think it odd if Macy's charged the same for a cashmere sweater as one made from a polyester blend. Yet the movie industry, facing flat or declining revenues, clings to a uniform pricing model that makes no sense.

Business columnist Steven Pearlstein tries to explain the puzzle of uniform pricing of movies in
today's Washington Post.

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