Friday, November 24, 2006

Why do all movie tickets cost the same?

In today's Washington Post, business writer Steven Pearlstein examines a fascinating economic puzzle:
Why will movie theaters charge the same $9.50 to see "Casino Royale" this Saturday night that they charged to see the disappointing remake of "All the King's Men" on a Wednesday night in the middle of September?....It wasn't always so. Back in the golden years of Hollywood, before PG and XXX, there were "A" movies, "B" movies and "C" movies, distinguished not by their sexual content, but by the box-office appeal of their stars. Not only did it cost more to see Clark Gable in "Gone With the Wind" than Ronald Reagan in "Bedtime for Bonzo," but the ticket price also varied depending on whether you saw them in a first-run movie house downtown or a second-run theater in the suburbs, and whether you took in a matinee or an evening showing.
The article is based on research by Barak Orbach (University of Arizona law school) and Liran Einav (Stanford economics department). Einav is a recent Harvard PhD in economics.