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Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

A Study on the Puzzle of the Uniform Admission Ticket Pricing for Motion Pictures

Vol.18, No.3, September , 61–74


English Version |  Korean Version
  •   (School of Economics, Sogang University)

  •   (Department of Economics, Seoul National University)

  •   (Korea Culture & Tourism Institute)

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Abstract  

Unlike the general case where the price of a product depends upon its quality or contents, in motion picture industry, the uniform admission price is a norm, regardless of its quality or production costs. We provide a theoretical explanation for the so-called puzzle of the uniform admission price. The theoretical model is built upon a signaling model where while the audiences do not know the quality of the movie, the owner of a theater knows it and uses the price as a signaling device about the movie's quality. First of all, it is shown that separating equilibrium where the admission price differs, depending upon the quality does not exist. Furthermore, under some circumstances, a unique pooling equilibrium exists, which passes Cho and Kreps' intuitive criterion. This shows that the uniform admission price is an equilibrium behavior by the owner of theaters.


Keywords
   Uniform Pricing, Signaling Game, Movie Industry

JEL classification codes
   C13, C72, D21, L13
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