It is how the theater owner makes a profit.High fixed cost of operating concession stand.
It's ubiquitous, as long as you understand the theory.Here is how I answered the question, with the help of the brilliant Steven Landsburg, in the first chapter of my book, Pricing on Purpose:Why don't we observe movie popcorn price wars, similar to what other industries engage in from time to time? When asked this question, the overwhelming majority of businesspeople will answer because there is no competition-the movie theater has a captive audience. Educated by the books written by Steven Landsburg and David Friedman-which ask and answer this provocative question along with many more-price theory had never come more alive for me.Now I look at the world through an entirely new prism, trying to detect how companies practice what economists call price discrimination. Hint: the answer is not obvious.This is actually a topic that, believe it or not, had been studied by Walter Oi, an economist, for an article from the Quarterly Journal of Economics dating back to 1971.I'll freely admit that I've built a career out of asking and answering this question. Chris Forsman, a Sales Consultant and Sage Value Pricing Boot Camp Graduate with Accounting Micro Systems in San Francisco sent me an interesting article from, "Why Does Popcorn Cost So Much at the Movies?"Before you go read the article, attempt to answer the question.
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