Movie-watching in Indian cinema halls has become a highly politicised commodity. First, a few state governments capped movie price tickets. An unintended yet easily anticipated consequence followed. The prices of complementary goods — popcorns, soft-drinks, and snacks — rose.
And now, the Maharashtra government has gone one-step ahead. IT also wants to tackle the rise in prices of these complementary goods. The Food and Civil Supplies Minister said this on the floor of the Maharashtra Legislative Assembly:
There is no ban on patrons carrying outside food to multiplexes and if the multiplex authorities prohibit it, they could face action.
Not to be outdone, the Karnataka government has said that it will soon follow suit.
I’ll leave the discussion on entitlement and endowment effects for another post. For now, let’s anticipate the unintended consequence of this latest move.
- The movie-watching experience can be expected to be less than satisfactory. Movie halls will be littered with homemade food. There will be fights over dietary habits. If the governments go further and cap food and beverages prices as well, theatres will have even lesser avenues to run profitably.
- Demand for substitute goods will increase. At the margin, people will decide to choose something else over watching movies at cinema halls. This works well for the likes of Netflix, video pirates, and theatre plays.
- Prices of other complementary goods will rise. One can expect an increase in the parking charges at movie theatres or a charge (instead of a refundable return) for the 3D glasses.
In short, I’m not going near a cinema hall anytime soon.