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TOPIC: Too much for movie popcorn? It's no rip-off, study finds

Too much for movie popcorn? It's no rip-off, study finds 02 Mar 2008 18:08 #17729

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By Lisa M. Krieger
Mercury News
02/27/2008

What's a movie without popcorn?

According to a new economic analysis, it would be a lot more expensive.

As one price goes up, the other comes down. So rather than cursing the cost of your next bag of buttered popcorn, take comfort in the fact that it subsidizes your ticket - and helps fill seats, say researchers at the University of California-Santa Cruz and Stanford University.

Moviegoers aren't being gouged at concession stands, the researchers conclude. Rather, the high cost of snacks helps keep ticket prices down, which allows more people to attend.

The researchers' analysis - based on data from thousands of showings at 43 multiplex theaters in 30 cities in a five-year period - answers the question of why a couple of hours in the dark with Daniel Day-Lewis costs only twice as much as a big box of Milk Duds.

They say that some die-hard film buffs will watch movies - and eat popcorn - no matter what the cost.

But for many of us, the ticket price matters. We'll skip the snacks, thank you.

"The theater owner has two choices. He can make money through admission tickets. Or he can make money through concessions," said UCSC economist Ricard Gil, who worked with Wesley R. Hartmann, an associate Professor at Stanford. "If he wants to make money on the ticket, that may deter a lot of people from coming in.

"So instead he charges a higher total price on people who are willing to pay for the whole movie experience," said
Gil, an enthusiastic consumer of both movies and snacks. "And he's able to charge a lower price for the guy who can barely afford it."

The same principle of economics - called price discounting - is reflected in the price of nachos at sports stadiums and wine at the opera. It also explains why products such as razors and video game consoles are cheap - but replacement blades and video games are not.

If movie popcorn were free, Gil estimated, each ticket could cost at least 25 percent more - boosting the price of a $10 show to $12.50.

At that price, families might stay home with their DVDs and Jiffy Pop.

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