microeconomics, behavior, policyIn response to the question (and subsequent answers):
In a competitive market, why is movie theater popcorn expensive?
What will be the impact on popcorn prices if a government comes with mandate stating: Public cannot be prohibited from carrying their own eatables inside movie theaters?
Intuitively, it seems, prices will fall significantly as theater owners try to discourage customers from bringing their own food by offering them at prices attractive to them so as to extract additional penny. albeit, at a lower margin.
I’m not sure theaters try hard to stop you from carrying in food. I often carry a backpack with me to a theater (for my laptop computer); they don’t check it. It could be full of food/popcorn for all they know. Thus, I think the choice for consumers is still between high-priced food vs. no food, not high-priced food vs. their own food.
I think the better question would be to ask what would happen if some unspecified government regulation forced theaters to charge less for food and drinks. This would force the theater to charge higher prices for something else to make up the loss, such as ticket prices. Some would be unwilling to pay the higher prices, so would instead choose a substitute, such as waiting for the movie to come out on DVD.
In other words, it’s the movie goers that determine their optimal mix of prices, not the theater owners. When government steps in to change the mix, then movie goers will be unhappy.
The movie theater would then be responsible for the costs of cleanup of trash and spills for items it never profited from. The costs to the theater for maintenance would sky rocket. The food items sold are carefully selected. Ever notice there are no basic chocolate bars… they melt and destroy chairs. So the theater loses a revenue stream and now has to charge $40 a seat to make costs. Which keeps people away from the theater. Which drives up costs further.
Not to mention that if this was upheld in court the law would then be applied to bars, restaurants, and anyone else showing entertainment.
And then what happens when someone bring in salmiak
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