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NYT & Economics


Robert H Frank, writing for the New York Times, discusses how one of his students enquired into the fact that while Broadway Theatres charged more for shows the more popular they were, cinemas did no such thing. Indeed this is true. Why?

The student in question had to put together a reasonable explanation and that explanation went something like this;
Charging the same price as for less popular plays would make it impossible to accommodate everyone who wants to see a big hit. Far better would be to ration scarce seating by charging a premium price. With a popular movie, by contrast, additional copies can be made at minimal cost, and large audiences can be accommodated by showing it many times a day on multiple screens. By keeping prices low, theater owners can fill many more seats and generate far more revenue than they could by charging premium prices at a more limited number of screenings.
You should read the whole piece as there are a few further examples.

Or, contrary to the explanation, it could just be an evil capitalist conspiracy to destroy the world...

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