Price discrimination

Price discrimination - February 15, 2006 Changes Ahead for...

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February 15, 2006 Changes Ahead for a Theater Near You By DAVID LEONHARDT LET'S say you decide to take a break tonight and go out to a movie. It's Wednesday, of course, so when you walk up to the ticket counter, there is not another person in line. You settle on "Glory Road," an inspirational basketball movie that has been out for a month. The theater is so empty that it almost feels as if you are watching it in your den. Your ticket costs $8. Now it's the weekend. You meet up with some friends to see "Date Movie," a spoof that has just opened to good buzz. You have to stand in a long line to get a ticket, and the only seats you can find are in the third row. It is clearly a hot ticket. Yet it costs the same $8 as "Glory Road." This isn't the way much of the American economy works. It's not how airlines sell seats, the Gap sells shirts or eBay sells anything. Soon, it won't be the way the movies work either. You will pay more for a ticket on the weekends and less on weekdays. You'll be able to buy a reserved seat in the center of the theater for a few extra dollars. One of these days, you may even have to pay more for a hit movie than for a bomb. The changes are under way, and they are long overdue. The theater industry's attempt to ignore the laws of supply and demand is as good an example of corporate inertia as you will find. For decades, going to the movies was one of the rituals of American life, and competition among theaters revolved mainly around trying to land more hot films than the theater down the street. But now theaters face a very different competitive landscape, thanks to DVD's, high-definition TV's,
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This note was uploaded on 04/21/2011 for the course ECON 1001 taught by Professor S.c during the Fall '10 term at HKU.

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Price discrimination - February 15, 2006 Changes Ahead for...

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