Optimal ticket pricing by seat location in the movie industry
Journal
Journal of Business Research
Journal Volume
210
Start Page
116177
ISSN
0148-2963
Date Issued
2026-05
Author(s)
Abstract
This study develops an analytical model to investigate optimal pricing strategies for movie theaters offering seats with heterogeneous viewing experiences. While price discrimination based on seat location is common for other performance goods, uniform pricing remains prevalent in the movie industry. By incorporating essential features of the movie industry, we determine that uniform pricing is optimal when the supply of prime-location seats is limited and the likelihood of consumers changing their minds before purchasing tickets is high. Specifically, uniform pricing creates perceived scarcity, which intensifies competition for preferred seats and encourages consumers to buy earlier. These advance purchases mitigate potential losses from consumer attrition and may offset the forgone revenue from not extracting consumer surplus. Lastly, this study examines the optimal seating design and suggests that theaters should offer only a moderate number of premium seats, even when additional capacity can be provided at no cost.
Subjects
Advance purchase
Price discrimination
Seat location
Ticket pricing
Uniform pricing
Publisher
Elsevier
Type
journal article