Why Popcorn Costs So Much at the Movies: And Other Pricing Puzzles

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Springer Science & Business Media, Apr 17, 2008 - Business & Economics - 326 pages
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• How Prices Matter rices are ubiquitous, so much so that their importance to the smooth operation of a market economy (even one constrained by extensive polit- P ical controls as is the case in China) can go unnoticed and unheralded. Prices are what all trades, whether at the local mall or across the globe, are built around. Tey facilitate trades among buyers and sellers who don’t know each other, meaning they make less costly, or more socially benefcial, the allocation and redistribution of the planet’s scarce resources. Indeed, as the late Friedrich Hayek is renowned for having observed, prices summarize a vast amount of - formation on the relative scarcity and, hence, the relative cost of resources (with much of the information subjective in nature) that can be known only by ind-i viduals scattered across markets and cannot be collected in centralized loc- tions, except through market-determined prices. 1 Because they summarize, and largely hide from view of buyers, so much i- formation spread among people throughout the world, prices can be puzzling. Why prices are what they are, and change for reasons that are obscured by a multitude of economic events that can extend backward in time and forward into the future, can be mysterious. Explaining many puzzling prices can be - tective work that the modern-day Sherlock Holmes would surely fnd challenging.
 

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First "discovery" that leaves my mouth open: how it would cost less (in lives) to overlook a terrorist plot that can become a terrorist attack in an airport because it would save the lives of many freeway users that would fly if the security level is not raised.... atonishing!
Preface : How price matters -- ch. 1. Price and the "law of unintended consequences" -- 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 -- ch. 2. Pricing lemons, views, and university housing -- 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 -- ch. 3. Why sales -- Price discrimination theory -- A textbook case of textbook price discrimination -- The logic of after-Christmas sales -- Sales and the economics of information -- Concluding comments -- ch. 4. Why popcorn costs so much at the movies -- Differential theater ticket prices -- Uniform popcorn prices -- The high price of theater popcorn -- The misguided entrapment theory of overprices popcorn -- Movie screening contract -- The Supreme Court and the high price of theater popcorn -- The cost of theater popcorn - on the margin! -- Concluding comments --
Contents: ch. 5. Why so many coupons -- Coupon and price discrimination coupons and peak-load pricing -- Evidence on couponing -- Coupon collusion -- The economics of information and coupons -- Concluding comments -- ch. 6. Why some goods are free -- 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 -- ch. 7. Free printers and pricey ink cartridges -- 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 printers and their ink cartridge -- Concluding comments -- ch. 8. Why movie ticket prices are all the same -- 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 --
Contents: ch. 9. Why so many prices end with "9" -- Just-below prices as historical artifact -- Just-below pricing and information economics -- Psychological pricing as code -- Concluding comments -- ch. 10. The economics of manufacturers' rebates -- The nature of rebates -- The reasons for rebates -- Rebates and product demand -- Breakage economics -- Concluding comments -- ch. 11. The psychology and evolutionary biology of manufacturers' rebates -- Subjective weighting of costs and benefits -- Endowment effects of purchases with rebates -- Salience and procrastination -- Explanations for peoples' observed decision making -- Concluding comments -- ch. 12. The question of queues -- Queues as 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 -- ch. 13. Why men earn more on average than women - and always will -- Conventional explanations for gender-pay differences : a different conceptual framework -- Risky behavior -- The linages 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 -- Subject index.
 

Contents

PRICE AND THE LAW OF UNINTENDED CONSEQUENCES
PRICING LEMONS VIEWS AND UNIVERSITY HOUSING
WHY SALES
WHY POPCORN COSTS SO MUCH AT THE MOVIES
WHY SO MANY COUPONS
WHY SOME GOODS ARE FREE
FREE PRINTERS AND PRICEY INK CARTRIDGES
WHY MOVIE TICKET PRICES ARE ALL THE SAME
WHY SO MANY PRICES END WITH 9
THE ECONOMICS OF MANUFACTURERS REBATES
THE PSYCHOLOGY AND EVOLUTIONARY BIOLOGY OF MANUFACTURERS REBATES
THE QUESTION OF QUEUES
WHY MEN EARN MORE ON AVERAGE THAN WOMENAND ALWAYS WILL
BIBLIOGRAPHY
Subject Index
Copyright

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About the author (2008)

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.

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