Why Popcorn Costs So Much at the Movies

by McKenzie, Richard B.

• ISBN13: 9780387769998
• ISBN10: 0387769994
• Format: Hardcover
• Copyright: 2008-05-10
• Publisher: Copernicus Books

Summary

Why Popcorn Costs So Much at the Movies, And Other Pricing Puzzles unravels the pricing mysteries we encounter every day. Have you ever wondered why all movies, whether blockbusters or duds, have the same ticket prices? Why sometimes there are free lunches? Why so many prices end with "9"? Why ink cartridges can cost as much as printers? Why merchants offer sales, coupons, and rebates? Why long lines are good for shoppers? Why men earn more than women, around the globe ' and why they always will? Richard McKenzie goes on to show how the 9/11 terrorists still kill Americans every day, because their attack distorted the perceived risks and relative prices of air vs. automobile travel, and jacked up both security costs and flight delays. Professor McKenzie also explores the unintended consequences of well-meaning efforts to spur the use of environmentally friendly fuels: starvation among millions of people around the world, and the destruction of rainforests in Malaysia and Indonesia. How can these things be? If you think you know the answers, think again. Why Popcorn Costs So Much at the Movies, And Other Pricing Puzzles shows you that the real reasons are sophisticated and surprising ' and in Professor McKenzie's hands, both informative and entertaining. You won't need a degree in economics to enjoy this fascinating book, just an armchair and an inquiring mind. Reviews: "Anything we think about every day is important. And who goes a day without thinking about prices? But prices are more important than most people realize. If you are interested in reducing pollution from cars, or not being fooled into paying too much, or too little, for products, or in just getting the best deal on popcorn at the movies, you will benefit from knowing more about prices than most people do. And there is no easier, or entertaining, way of finding out more on how and why prices are important than by reading McKenzie's fascinating book Why Popcorn Costs So Much at the Movies, And other Pricing Puzzles. And are people really fooled by all those prices that end in 99 cents? You'll be surprised." Dwight Lee, University of Georgia, 2008-01-25 "This book is about more than popcorn prices. McKenzie uses clear economic reasoning to explain so many things that are otherwise puzzling. He also shows that the federal government's rules for getting on airplanes have caused more deaths than the terrorists caused on 9/11. How does economics show that? Read, be entertained-- and learn." David R. Henderson, Research Fellow, Hoover Institution, 2008-03-21 " This is one of the very best books on pricing. If you are looking to understand the economics of the world around you, you can do no better than to start here." Tyler Cowen, George Mason University; economics blogger of www.marginalrevolution.com , 2008-02-27 " Truly liberating. Using a series of fascinating enigmas we've all encountered in our daily lives, Richard McKenzie reveals how the real economic world works. Highly readable. Extraordinarily enlightening." W. Michael Cox, senior vice president and chief economist at the Federal Reserve Bank of Dallas, 2008-02-23

Author Biography

Richard McKenzie is the Walter B. Gerken Professor of Enterprise and Society in the Paul Merage School of Business at the University of California, Irvine. He has written a number of books on economic policy, most notably the Microsoft antitrust case in the United States. His latest book, In Defense of Monopoly: How Market Power Fosters Creative Production (University of Michigan Press, 2008) challenges the theoretical foundations of antitrust law and enforcement. His commentaries have appeared in national and major regional newspapers in the United States, and he produced an award-winning documentary film, Homecoming: The Forgotten World of America's Orphanages, that has aired across the country on public television. Richard McKenzie is a frequent columnist for Wall Street Journal.

Table of Contents

Preface: How Prices Matter	p. V
Price and the "Law of Unintended Consequences"	p. 1
Hybridnomics: HOV-Lane Economics, California Style
Air Travel Safety for Infants and Toddlers
9/11 Terrorists and American Deaths Since 9/11
Water Crises in Southern California
Ethanol Subsidies and World Hunger
The California Electricity Crisis
Concluding Comments
Pricing Lemons, Views, and University Housing	p. 29
The Pricing of Lemons
How Prices Adjust to Advantages and Disadvantages of Property
Why Retirement Does Not Curb the Retirees' Food Consumption
University Mispricing
Concluding Comments
Why Sales	p. 57
Price Discrimination Theory
A Textbook Case of Textbook Price Discrimination
The Logic of After-Christmas Sales
Sales and the Economics of Information
Concluding Comments
Why Popcorn Costs so Much at the Movies	p. 79
Differential Theater Ticket Prices
Uniform Popcorn Prices
The High Price of Theater Popcorn
The Misguided Entrapment Theory of Overpriced Popcorn
Movie Screening Contract
The Supreme Court and the High Price of Theater Popcorn
The Cost of Theater Popcorn-On the Margin!
Concluding Comments
Why so Many Coupons	p. 101
Coupons and Price Discrimination
Coupons and Peak-Load Pricing
Evidence on Couponing
Coupon Collusion
The Economics of Information and Coupons
Concluding Comments
Why Some Goods Are Free	p. 113
Profits from Zero Prices
The Nature of Products and Pricing Strategies
The Pricing of Experience Goods
The Pricing of Network Goods
Network Effects and the Microsoft Antitrust Case
Optimum Piracy
The Pricing of Addictive Goods
Rational Addiction
Concluding Comments
Free Printers and Pricey Ink Cartridges	p. 143
Relative Production Costs and Buyer Entrapment
Low- and High-Volume Printer Users
The Relevance of Search Costs
Differences in Discount Rates
Gaming Printer/Cartridge Deals and Technical and Contract Solutions
The Evidence on the Relative Prices of Printers and Their Ink Cartridge
Concluding Comments
Why Movie Ticket Prices Are All the Same	p. 159
Different Price for Different Folks
The Puzzle of Uniform Ticket Prices at the Movies
Past Price Variations
Why Uniform Ticket Prices
DVD Releases
Concluding Comments
Why So Many Prices End with "9"	p. 177
Just-Below Prices as Historical Artifact
Just-Below Pricing and Information Economics
Psychological Pricing
Prices as Code
Concluding Comments
The Economics of Manufacturers' Rebates	p. 195
The Nature of Rebates
The Reasons for Rebates
Rebates and Product Demand
Breakage Economics
Concluding Comments
The Psychology and Evolutionary Biology of Manufacturers' Rebates	p. 211
Subjective Weighting of Costs and Benefits
Endowment Effects of Purchases with Rebates
Salience and Procrastination
Explanations for People's Observed Decision Making
Concluding Comments
The Question of Queues	p. 233
Queues as a Pricing Puzzle
The Easy Solutions for Queues
The Economic Logic of Queues
Premium Tickets
Contrived Shortages and Buyer Loyalty
Bandwagon Effects and Queues
Single Versus Multiple Queues
Last-Come/First-Served, a Solution for Queue Length?
Concluding Comments
Why Men Earn More on Average than Women-and Always Will	p. 263
Conventional Explanations for Gender-Pay Differences
A Different Conceptual Framework
Risky Behavior
The Linkages Between Mating and Labor Markets
Explaining the Narrowing Pay Gap
The Female/Male Wage Gap: Hard Wired or Cultural?
A Summary Assessment
Concluding Comments
Bibliography	p. 291
Subject Index	p. 319
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