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Dear Economist

Published: August 18 2006 12:22 | Last updated: August 18 2006 12:22

Dear Economist,

When I go to a restaurant a dish that costs more to make - perhaps lobster or the product of an expensive chef’s imagination - costs more to purchase. The same is true when I go to a clothes store.

However, when I go to see a movie at my local cinema, no matter what the film, no matter how much it cost to make, it costs the same to see.

As I only go to big-budget flicks that have been praised to the rafters, I feel I am being subsidised by the poor folks who are watching cheap run-of-the-mill pictures. Why don’t movie theatres have adjustable pricing?

Arthur Spirling, Rochester, NY

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Dear Mr Spirling,

You are confused. You are not consuming a film but a film screening, and film screenings cost the same to produce no matter what is in the projector. The price of producing the film in the first place is irrelevant.

Nevertheless, there is a puzzle here. While we shouldn’t expect big-budget films to command higher ticket prices, these prices should surely vary in an attempt to get every seat in the house full. It’s not obvious that popular movies should be more expensive: the most popular books tend to enjoy the greatest discounts. But completely uniform pricing is odd.

One explanation is that people might buy a cheap ticket and then sneak into a more expensive screening; but uniform pricing predates the multiplexes. A second explanation, advanced by economist Barak Orbach, is that distributors don’t like to be associated with “discount movies” and so they tell cinemas what price to charge. Since this is illegal in the US, their instructions have to be simple, hence uniform pricing. I prefer the simplest explanation: cheap tickets with minimum confusion is a great way to sell popcorn.

Questions to: economist@ft.com

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Tim Harford

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