Home | Business News | Browse by Publication | R | Regulation

Solving the world's problems.

Article Excerpt
WHY POPCORN COSTS SO MUCH AT THE MOVIES: And Other Pricing Puzzles

By Richard McKenzie

328 pages; Copernicus Books, 2008

[ILLUSTRATION OMITTED]

Have you ever wondered why the price of movie theater popcorn is so high, sometimes almost as high as the price of a movie ticket? Richard McKenzie has. McKenzie, an economist at the University of California, Irvine and a prolific writer of books and articles has written an entire book about pricing, Why Popcorn Costs so Much at the Movies and Other Pricing Puzzles. McKenzie uses clear economic reasoning to explain many aspects of pricing that are otherwise puzzling. He even uses reasoning about prices to show that the federal government's rules for getting on airplanes have caused more deaths than the terrorists caused on 9/11. In fact, McKenzie, a strong believer in economic freedom and limited government, has a number of insights about the harmful effects of other regulations besides those in airports.

POPCORN In his book, McKenzie devotes one chapter to popcorn prices; thus the title. Unfortunately, the popcorn chapter is the weakest in an otherwise solid book. Let's get it out of the way first.

The conventional wisdom about high popcorn prices is what McKenzie calls the "entrapment theory": moviegoers face a monopoly supplier of popcorn because they are trapped in the theater, so the theater owner charges supra-competitive prices. McKenzie claims a number of problems with...

View this article FREE - Now for a Limited Time, try Goliath Business News
Free for 3 Days!