Why 'Barbie' tickets aren't more expensive

Both Oppenheimer and Barbie are so popular that tickets are selling out days or even weeks in advance. That's great for Hollywood, but it raises a question for economists: Why don't ticket prices rise to clear the market and eliminate any waiting period? Those willing to pay more to see the movie sooner would be able to, and the theaters and studios might be able to make more money.

As it turns out, however, there are good explanations for why ticket prices don't go up.

Before I get to them, allow me to clear up a few misconceptions. First, there is the idea that theaters don't mind long lines, because they can sell you a ticket to your second-choice movie if your first choice is sold out. With the advent of online ticket sales, that reasoning no longer applies: You aren't physically present at the cineplex, and if you see online that Barbie is sold out, you may just stay home. Also less compelling is the argument that long lines help a movie, as they do a restaurant, by increasing its "buzz." The notion that either Barbie or Oppenheimer needs more buzz is suspect, to say the least.

A more relevant factor behind the static pricing has to do with social networks. Both the movie theater and the studio want to attract customers who will talk about the movie afterwards, whether directly to their friends or on social media. They also want customers who will want to see the movie multiple times, and generate a kind of cult following.

For the most part, younger audiences better serve these functions than do older audiences. Younger people have on average more friends and see them on a more regular basis, and are more likely to text friends or post on TikTok. They generally have greater enthusiasms. Older people are more likely to have more limited social networks, filled with other older people, and if they have children at home, less likely to go out.

In other words, in terms of publicity at least, a younger moviegoer is more valuable than an older moviegoer. (It is a painful admission for an older moviegoer like myself.) So if theaters raised their prices, the audience would skew older and wealthier. It would be harder for the movie to generate much buzz, and what buzz it did generate would have less impact.

Keeping the price low, on the other hand, favors those willing to scour the internet for tickets, or those who can commit to a scheduled movie date and time in advance. This is typically a younger group.

A second reason for keeping prices low is that moviegoers might feel ripped off if they had to pay a higher price for every movie they really wanted to see. In the short run, the theater would pull in more money, but over time moviegoing could become less popular. Customer goodwill matters.(1)

A third reason that the price does not rise is concession income. A movie theater earns much of its income — it can be almost one-third of revenue for some chains — from selling soda, popcorn and other items, and typically it does not share that money with the studios. That makes revenue from ticket sales a smaller share of the overall profit.

Of course none of this serves as a complete explanation for why ticket prices aren't higher for Barbie. But it helps explain why the desire to capture more profit through higher short-run ticket prices could be less important to the overall profit calculus. If one of the main goals is to foster customer goodwill, for example — as it surely is the movie business — then price may not be the main business instrument.

Usually prices clear markets — but not always. A market price serves many functions, and when it has something else to do, usually it is keeping people happy. So if you have to wait a while to see that movie you have been looking forward to for so long, rest assured that your patience is serving a good social cause.

In the meantime, while you await your showing of Barbie or Oppenheimer, how about watching a match of bullet chess? No waiting necessary, not even for the end of the game.

-------

(1) In similar fashion, if there is a shortage of some food item, for instance peanut butter, the supermarket does not always raise the price in order to clear the market.

(COMMENT, BELOW)

Cowen is a Bloomberg View columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include "The Complacent Class: The Self-Defeating Quest for the American Dream."

Previously:
• 06/07/23 Would you let Elon Musk implant a device in your brain?
• 05/10/23 Second-guess AI 'experts'
• 03/14/23 Governments should compete for residents, not businesses
• 02/22/23 Economists finally have a good excuse for being wrong A land tax won't make cities more affordable
• 01/26/23 Economists finally have a good excuse for being wrong
• 01/24/23 AI is improving faster than most humans realize
• 12/27/22 Beware the dangers of crypto regulation
• 12/27/22 Americans have found their happy place
• 12/14/22 The real risk of higher inflation is lower wages
• 12/07/22 Fight poverty, not income inequality
• 10/10/22 A crisis is coming in Europe. The only question is, which kind?
• 09/06/22 What is the purpose of public policy?
• 08/15/22 The future of travel is less exotic
• 08/01/22 Welcome to the era of antisocial media
• 07/25/22 Biden's COVID diagnosis is a wake-up call for America
• 05/12/22 A nuclear strike might not prompt the reaction you expect
• 03/22/22 Doomscrolling has ruined our sense of time
• 01/22/22 Wokeism has peaked
• 01/31/22 The latest bias to worry about
• 01/17/22 America's loneliness epidemic
• 01/07/22 Some of America's top universities just revealed they're not morally serious
• 12/29/21 America would be more happy with more people
• 12/10/21 Bill Gates, Jeff Bezos, Elon Musk . . . and Paul McCartney
• 12/08/21 The only two pieces of advice you'll ever need
• 11/29/21 Nuclear fusion is close enough to start dreaming
• 10/27/21 America's national mood disorder
• 06/10/21 Lifting of mask mandates poses a challenge for Libertarians
• 05/28/21 Why economics is failing us
• 04/19/21We need green energy. We don't need green jobs
• 04/14/21 Libertarianism isn't dead. It's just reinventing itself
• 04/05/21 What does the world need? More humans
• 02/10/21 If Biden goes big now, he may have to go small later
• 01/12/21 Covid improved how the world does science
• 12/07/20 How to make sure your complaint is heard
• 10/27/20 It's getting better and worse at the same time
• 09/14/20 How to be happy during a pandemic
• 09/04/20 Trump is winning the vaccine debate with public health experts
• 07/01/20 Why Americans are having an emotional reaction to masks
• 05/20/20 Covid-19 will expose the ghosts in the U.S. economy
• 05/07/20 Are aliens visiting us? US military seems to think so
• 05/06/20 America's reopening will depend on one thing --- trust
• 04/22/20 How the covid-19 recession is like World War II
• 04/15/20 America is returning to 1781
• 04/08/20 Covid-19 is is upending everything for status seekers
• 03/17/20 The coronavirus will usher in a new era of entertainment
• 01/28/20 Social Security isn't doomed for younger generations
• 01/08/20 Why 2020 is harder to predict than 2019 was
• 12/02/19 Equality is a mediocre goal so aim for progress
• 11/25/19 Inflation inequality creates winners and losers
• 11/09/19 OK kids. This boomer has had enough
• 10/20/19 Would you bet against Trump in 2020?
• 09/25/19 The right industrial policy for America
• 09/24/19 Harvard's legacies are nothing to be proud of
• 09/02/19 Yes, the Fed could still stop a recession
• 08/20/19 A trade deal with China wouldn't change much
• 07/29/19 How your personality traits affect your paycheck
• 07/16/19 Internet 101 should be a required class
• 05/28/19 How Dems actually are the ANTI-immigrant party
• 04/23/19 Want to help fight climate change? Have more children
• 03/22/19 America isn't as divided as it looks
• 03/12/19 The Twitter takeover of politics: You ain't seen nothing yet
• 03/04/19 How to tell which Dem dreams won't come true
• 02/07/19: Now the Dems want to end America's nuclear first strike option. How clueless is that?
• 01/29/19: The shutdown hit a lot of government workers --- hard. But, ultimately, who is responsible for their unfortunate circumstances?
• 12/12/18: The West is abusing its legal power to punish people or institutions that do things it doesn't like. It better stop
• 10/23/18: The US needs Saudi Arabia, and vice versa
• 10/19/18: The right finds the perfect weapon against the left
• 07/24/18: The drive for the perfect child gets a little scary
• 06/04/18: Side effects of the decline of men in labor market
• 05/14/18: Proving Marx's theories right
• 05/08/18: Holding up a mirror to intellectuals of the left
• 05/01/18: Virtual reality will make lives better ... mostly
• 04/16/18: It's hard to burst your political filter bubbleIt's hard to burst your political filter bubble
• 04/09/18: The missing key to grasping why American politics seems to have become more polarized, with no apparent end in sight
• 04/05/18: Two American power centers are about to clash
• 03/22/18: We fear what we can't control about Uber and Facebook
• 03/08/18: How to stop the licen$ing insanity
• 01/10/18: Polarized Congress needs to bring back earmarks
• 12/27/17: The year when the Internet collides with reality
• 11/07/17: Would you blame the phone for Russian interference?
• 10/23/17: North Korea is playing a longer game than the US
• 10/12/17: Why conservatives should celebrate Thaler's Nobel
• 08/02/17: Too many of today's innovations are focused on solving problems rather than creating something new