Does ethanol make it too expensive to enjoy? 

First it was tortillas. Now it’s movie tickets.

The price of movie tickets is expected to go up this year due to the rising cost of corn used to make popcorn, according to Ricard Gil, a University of Santa Cruz economist who studies the movie industry. The price corn, in turn, is partly being bumped up by the increased production of ethanol.

Gil’s comments first appeared in an article in Advertising Age (subscription required). They were quickly picked up by other press outlets, with reports appearing in the Kansas City Star, the Seattle Times,, NPR, the New York Daily News, the Orlando Sentinel, and elsewhere.

The reasoning goes like this: Movie theaters subsidize the price of tickets with sales of high priced popcorn. While theaters have to share ticket revenues with movie distributors, they get to keep all the money they make on concessions. But if moviegoers start passing on the pricey popcorn — which the theaters are making less of a profit on — theaters will need to get more money at the window. According to the press reports, Gil expects ticket prices to jump by as much as 30 percent this year.

Earlier this year, Gil and Wesley Hartmann of Stanford’s Graduate School of Business coauthored a report (available here) on the price of theater popcorn and its relation to movie economics.

[Photo by Flickr user PPDIGITAL (CC)]

Power Politics

May 28, 2008