Book Review – Why Popcorn costs so much at movies

The book is Why Popcorn Costs So Much at the Movies: And Other Pricing Puzzles by Richard B. McKenzie.

I have mixed feelings about the book. The first thought I had was that the book reads like a blog and probably would have been a very good blog that draws lots and lots of comments. That said, the flip side is I think it needs tighter editing. The discussions in the chapter definitely need to have a better flow. The conclusions at the end of each chapter do not help.

I am impressed in general by the logic and analysis McKenzie applies to economic and pricing puzzles. But for most puzzles there seems to be equally plausible alternate explanation.

In the first few chapters he talks about the logic of buying vs renting houses. His discussion of the homeowner tax credit flows to the renters in the form of lower rent sounds plausible. Except the argument ignores the possibility that not all renters may have  credit history to buy house or not all of the rental properties are available in nice neighborhoods people would want to live in.

Regarding free WiFi in coffee shops, McKenzie argues that sell the value of coffee and give free WiFi since the marginal cost to provide this service is $0. Again I do not agree with this. What about the fairness argument, why should those who just drop in to grab coffee and run out should subsidize the WiFi used by a few who spend hours at the shop?

On of the puzzles is why prices end in 9, I cannot say I understand the reasoning. There was an article on the same topic in The Times some time back. I liked that article a whole lot more.

As I said before, the topics discussed in the book would have been great in a blog format.

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