Black Marketing And Price Discrminination Essay

763 words - 4 pages

ECONOMICS OF “BLACK MARKETING IN MOVIE TICKETS”

“A black market is a market in goods or services which operates outside the formal one(s) supported by established state power” - Wikipedia.

“A black market is an illegal free market which flourishes in economies where consumer goods are scarce or are heavily taxed. In the first kind, black market prices are higher than the 'official' or controlled prices. In the second kind, prices are lower than the 'legitimate' or taxed prices, due to tax evasion. Black market and black money go hand in hand” - Business Dictionary.

Black markets are essentially channels of buying and selling which are not sanctioned by governments.

Black Markets ...view middle of the document...

Table - 1

|1990’s to early 2000 |Late 2000 ~ present |
|Ticket type |Price / ticket (Rs.) |Ticket type |Price / ticket (Rs.) |
|Stall |60 |Silver | 240 |
|Balcony |100 |Gold | 270 |
|Box |120 |Platinum | 280 |

Why did the prices jump almost 250 % in less than 10 years?

The main reason was that movie hall owners realized, either instinctively or through research, that the movie goers were willing to pay the premium demanded by the black market. The owners recognized that they were not extracting the total consumer surplus from movie goers based on the going rate for black market tickets. This is evident from the figures listed in table – 2.

Table – 2.

|Ticket type |Ticket window rate (Rs.) |Black market rate (Rs.) |
|Stall |60 |120 |
|Balcony |80-100 |180-200 |
|Box |120 |250 |

So theatre owners decided to increase their rates in such a way that the entire consumer surplus was absorbed by the price of the ticket at the window itself. Consumers were using up their entire willingness to pay at the ticket window rate, the black...

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