Theatre Design & Technology - Feb 1966 - 15

How are we to interpret all this evidence? It indicates that rational ticket pricing calls for gradual
increases in prices unti I the increase begins to
affect income negatively: until one reaches the
elastic portion of the demand curve. It means as
we II that the produ cer cannot look to over-all
price cuts as a means of increasing income. It also
provides the support for a stati sti cal assertion made
earlier: the record indicates a narrowing of the
gap between the price of musical and non-musical
productions. If demands for individual shows were
more elastic it might have paid producers of nonmusical shows to hold the price line while musicals
increased in price, producing a possible shift of
demand from musicals to non-musical productions.
The relative lack of response to price reductions
indicates that, if producers had behaved in this
fashion, their reward would probably have been
reduced income. The role of the theatre owner must
also be considered. Self-interest leads him to favor
uniformity of ticket pricing and the narrowing of
the gap between different types of productions.
This, of course, is made possible by the very inelasticity of demand for tickets already demons trated.

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GRAPH 4: Comparison of Indices for the Metropolitan Area Per Capita Expenditure on Broadway
Theatre and Ticket Prices, 1954-60. 9

GRAPH 5: Living Theatre Attendance in New York
City (Broadway Theatre).13

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february 1966

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Another reason for the lack of ability to use price
as a means of competition among shows is the
fixed seating capacity of the individual house. If
a particular show is running at 80% of dollar capacity
its manager can lower the average price of admission no more than 20%; and that will only keep
current income constant if the house sells out
completely. To increase income above the current
level, the quantity response must be greater than
the pri ce cut. However, the c loser a show is to
capacity, the less ability it has to cut price as a
means of increasing income. Too, the show that is
far below capacity may be able to cut prices further,
but it stands the least chance of attracting customers as it has already lost favor (or never found
it) as a product in the market. This does not mean
that no price flexibility exists. One answer lies
with use of the well-known "two-fer". By cutting
prices selectively, the producer attempts to reach
the elastic portion of the market. Week-night trade
with audience groups such as teachers, students
and civil servants is sought by the producer. Regular
box office and mail customers continue to see the
announced prices in the lobby and printed in the
newspapers, and may be totally unaware of the "price
reduction" that has taken place.
What may be rational behavior for the short run has
led to higher prices for tickets. But there is also
the long run. If this pricing policy has produced
hard-core attendance and a resultant hard core of
theatre-goers, new customers may not be entering
the market. It is my own thesis that this thoroughly
rational policy has raised short-run income but
spells possible disaster in the long run. When the
present generation of theatre-goers dies out, it
may be replaced by television viewers and consumers of "art house" movies. Any deliberate policy
on the part of the industry or the government to

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