Book Review: ‘Why does popcorn cost so much at the movies: and other pricing puzzles’ by Richard B. McKenzie
‘Why popcorn costs so much at the movies; and other pricing puzzles’ 1by Richard B. McKenzie2 explains the economics behind the pricing in the markets we are around everyday and the public help to generate by helping the circular flow of income. McKenzie applies logic and analyses the data he finds although there are some major flaws in his book that he does not explore on which means it gives the book weakness. McKenzie does not confine himself to general ideas of inflated prices or average market prices, he even uses reasoning about prices to show that the federal government’s rules for getting on airplanes have caused more deaths than the terrorists caused on 9/11. McKenzie has an overpowering opinion of different regulations and about why they are harmful to us. This although is a flaw as he sometimes is overly bias and causes gaps in his arguments.
The theory behind about how and why popcorn cost so much at the movies is not McKenzies best in the book. I think that this chapter is infact the weakest in the book and although the name is definitely intersesting as a title, and would grab the intention of not only keen economists but also others wanting a simple economics book – which this is definitely not. One criticism is that McKenzie states the ‘entrapment theory’ which suggests that people purchase the popcorn as it is cheaper in the cinema than the cost of their time to make it itself. This theory supports the idea that the cost of your time is what causes people to not produce the popcorn themselves. Many people do not think of this, and the fact that it is much easier than making it yourself is the decider in which people go on to think if and where they get their popcorn. The cinema is also the monopoly in the popcorn market, especially in the cinema as no other provider would be there. This means that want and worth comes into play. McKenzie demonstrates this argument well with an unbiased view, which was easy to read. It was the simplest chapter in the book too.
Although McKenzie thouches upon the idea that customers value the bundle of the movie with the popcorn and so the theatre is able to price discrimate between the two. Richard McKenzie does not explain this fully, and only briefly mentions it, not explaining it fully. It is a very valid point and which has been wasted in my point of view. Explaining this view too would make the chapter more eligible.
McKenzie also writes about regulation in the cinema. He made a very valid point of vertical integration although, this was not followed up by a strong counter argument of having the price increased for each ticket such as increasing real wages in a labour dominated market – the popcorn industry. Here McKenzie is biased in his views I feel, as he does not attempt to argue for the theatres and blames them for increasing their prices without a cause which although could be true, there are probably many more reasons to why the cinemas have, as every price change effects them too, as many less people will choose to go to the cinema with price inflations.
Another chapter called ‘Price and the “law” of unintended consequences’ it involves the water crisis of southern California. McKenzie lays out a very clear example, which was well written and clear to beginner economists. This was my best chapter as it was concise too. His way of using and setting out examples and using general terminology and no complex definitions within these means that you can then adapt the example to the economics making you understand it clearly and also quickly which is useful for an aspiring economist.
McKenzie writes about the housing crisis in the University of California Irvine which he is obviously biased about as he is a professor there, although it also means he knows and understands the situation very well. Although this means he brings in his own...
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