Consumers want to know – or may think they already know: “Why do men make more money than women?” or, “Why do so many prices end with the number nine?” And, as the summer movie season approaches, “Why do movie theaters charge so much for popcorn when it’s cheap to make it at home?”

The answers to these and other pricing puzzles shoppers encounter daily are typically much more complicated and surprising than they may appear.

Richard B. McKenzie, economics and management professor at UC Irvine’s Paul Merage School of Business, has solved some of the most puzzling pricing enigmas in his new book Why Popcorn Costs So Much at the Movies, And Other Pricing Puzzles.

The economic mysteries McKenzie has unraveled often run counter to popular wisdom, challenging convention and consumers’ long-held assumptions. 

“I have a rule that guides my work: When everyone thinks something is so, it generally isn’t. This is especially true of prices,” he says. “Surface explanations often don’t hold up well under scrutiny guided by a little elementary economic analysis. 

“I must confess to often being surprised at some of the twists and turns that came up as I wrote this book.”

McKenzie, a noted expert on economic policy, monopolies and antitrust, and digital economics, applied economic reasoning to a handful of quandaries, including:

• Why popcorn is expensive in movie theaters. McKenzie found the inflated price of theater popcorn has a lot to do with an antitrust ruling in 1948. The ruling sought to promote more competition and lower ticket prices by mandating that studios get out of the business of operating theaters. It essentially backfired when the new arrangement caused ticket prices to substantially increase, causing theaters to try to slow that price hike by instead raising concession prices.
  
  
• How even the best-intentioned programs can have negative consequences. McKenzie found efforts to encourage the use of environmentally friendly fuels have led to starvation among millions of people around the world and the destruction of rainforests in Malaysia and Indonesia.
  
  
• The reason terrorists responsible for 9/11 continue to cause more American deaths after the attacks. McKenzie argues the 9/11 attacks hiked the cost of flying and grounded would-be flyers on the highways, giving rise to more driving accidents, injuries and deaths.
  
  
• How long lines actually are good for shoppers. McKenzie explains that lines reflect a tradeoff shoppers and stores make between low prices and the cost to consumers, in time, of waiting longer in line.

McKenzie’s work, published by Copernicus (Springer), includes examinations of the pricing scenarios in after-Christmas sales, cheap computer printers and pricey ink cartridges, coupons and manufacturers’ rebates.

The book is available from a variety of retailers including Amazon.com and Barnes & Noble, and also is for sale directly from the publisher. To view a YouTube video of the author demonstrating another surprising pricing puzzle connected to movie theater popcorn, visit www.youtube.com/watch?v=DRZxVmFD-n0.

Jason Mednick
949-824-5951
jmednick@uci.edu