Movie-Theater Industry"
BY: LIRAN EINAV
Harvard University
Department of Economics
BARAK Y. ORBACH
Cleary, Gottlieb, Steen & Hamilton
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Paper ID: Harvard Law and Economics Discussion Paper No. 337
Date: October 2001
Contact: LIRAN EINAV
Email: Mailto:Leinav at kuznets.fas.harvard.edu
Postal: Harvard University
Department of Economics
Littauer Center
Cambridge, MA 02138 USA
Phone: 617-588-1402
Fax: 520-223-4973
Co-Auth: BARAK Y. ORBACH
Email: Mailto:BOrbach at cgsh.com
Postal: Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006-1470 USA
ABSTRACT:
In any given movie theater, all movies are priced the same
regardless of their theatrical success and potential and
regardless of the general demand conditions. This phenomenon is
an extreme example of the practice of uniform pricing of
differentiated goods, for which traditional economic theories
provide no explanation. This paper studies the case of the
pricing practices in the movie-theater industry that appear to
be inferior in comparison to alternative pricing policies. We
examine various possible causes for the practice that may shed
light on the persistence of such inefficient pricing policies.