Introducing Price Competition at the Box Office

Abstract

Why is it that movie ticket prices do not vary between films that cost vastly different amounts to make? It is because the current model for the production, distribution, and theatrical exhibition of feature films is deeply flawed. Despite long-awaited federal action designed to curb anticompetitive behavior, film distributors have continued to exert inappropriate control over pricing at the box office. The result is an insufficiently competitive-and hence inefficient-market for theatrical exhibition. Previous scholarship has discussed some of the root causes of this behavior and has called for ticket price differentiation based upon the context of a screening (such as the time of day, the day of the week, the season, or the seating). Some scholars have also suggested pricing based on film genre. Unfortunately, these proposed solutions fall short of the mark, and there has been a glaring absence of discussion or scholarship about the market problems resulting from a lack of price differentiation between individualfilms. This article analyzes anticompetitive behavior in film exhibition, focuses on the resulting market inefficiencies that ultimately harm the consumer, and calls for a pricing system primarily influenced byfilm-specific costs.