Price Discrimination Disneyland Summary

Coney Island and Disneyland are two historical representations of pleasurable pastimes where Americans could go to temporarily leave behind their stereotypical duties and rigid social conduct. The American culture in the late nineteenth century to the twentieth century was a time period where Americans were establishing standards on ways to act and live in America. These standards combined the idea of happiness with socially acceptable behavior. Over time the American Dream became more defined, where the white picket house family was the ideal goal for any American. This traditional mindset would pave the way for the creators of Coney Island and Disneyland to create a place where Americans could escape these social constructs to have fun.

A price ceiling is a government-levied maximum rate for a product or good. When a price ceiling inflicted by the government is more than retail equilibrium price, the price ceiling has no effect on the market or economy. This is because it does not obstruct supply, nor does it boost the demand. A different effect transpires if the government imposes a price ceiling below the market’s equilibrium rate. The suppliers will no longer be capable of charging the price that the market mandates, but they are required to meet the maximum price determined by the government’s price ceiling. When the demand rises beyond the capability to supply, shortages ensue. This leads to rationing of the product, causing some consumers to experience longer lines to obtain the product. In a worse case, there would be no products available for the consumer to buy.

Disneyland was one of the first amusement parks ever to even charge an entry fee. When Disney land opened in 1955 single main entrance were free to enter with visitors purchasing tickets for each ride but Disneyland changed all that. Walt knew that an entry fee was necessary to keep out troublemakers and keep Disneyland from becoming free babysitting like many local parks were. Disneyland joint both systems, charging $1.00 for entry then selling ticket booklets for $2.25. Those ticket booklets contained eight rides including ‘A’ tickets were the cheap rides, the rides that no one really wanted to ride on, ‘B’ tickets were a little bit better all way up to the top of the line the ‘E’ tickets.

Similar problems occurred in Disneyland Tokyo, where management didn’t even think about the height difference of Asians and Americans, resulting in too high public phones for Japanese guests. Concluding it is clear that the American company originally tried to implement a standardization strategy, when launching theme parks in other countries, without taking the local culture into consideration. Country specific procedures and regulations, and different local customer preferences forced Disney to adapt features of the US theme park business model to the local markets.

Recently, at Universal Studios, the Wizarding World of Harry Potter opened up. This magical land is based off of J.K. Rowling’s Harry Potter series, and includes fun rides, a Hogwarts replica, exciting shops, and even Moaning Myrtle in the bathrooms! This recent success is expected to help some, but hurt others. Disneyland might be seeing a loss of customers, due to this addition to Universal Studios. Disneyland is expected to lose business, but the wonderful land full of fairy tales has started competing for customers. Disneyland has started building a Star Wars themed development, the opening date has not been released yet. Who will win the war for service? Only time will

As a looked at the price of the admission, my jaw dropped. It costs over a hundred dollars to get into Disneyland, but not if you lived in the 1950s. In the 1950s, Disneyland would charge “$1.00 admission” which would be “about $9 in today’s dollars” (Malloys). Oh, how I wished I had a time machine.

‘Why popcorn costs so much at the movies; and other pricing puzzles’ 1by Richard B. McKenzie2 explains the economics behind the pricing in the markets we are around everyday and the public help to generate by helping the circular flow of income. McKenzie applies logic and analyses the data he finds although there are some major flaws in his book that he does not explore on which means it gives the book weakness. McKenzie does not confine himself to general ideas of inflated prices or average market prices, he even uses reasoning about prices to show that the federal government’s rules for getting on airplanes have caused more

Those consumers that have flexibility to choose when they demand a product will benefit from price discrimination. An example of this would be workers that have the ability to take a holiday at short notice might be able to benefit from a heavily discounted price. This is second-degree price discrimination and it can be shown below on the diagram.

The anticipation of heightened demand dynamically affects admission price for theme parks. Walt Disney World and Disneyland recently introduced variable pricing in 2016 so that park tickets will cost more during holidays and peak period weekends. This only applies to one-day tickets, and not multi-day packages. Disney’s major competitor, Comcast’s Universal Studios, has also adopted demand-based pricing. One difference though, is that their system provides incentives for visiting on off-peak days, and/or booking tickets online in advance. Guests can get $5 to $20 off the walk-up price, with the bigger discounts saved for midweek, low-demand periods. A variety of other discounts, packages, and promotions are available to guests that are all designed to bring down the per-day admissions cost for visitors, while simultaneously ensuring a longer stay for guests. A longer stay is a win-win situation because it means more money spent overall at theme parks, restaurants, hotels, and gift shops.

Competing amusement parks has upgraded their attractions to attract more consumers and Disney is has recently strategizing this approach to a more concentrated perspective. This can ultimately lower their revenues until the plan is complete.

After Eisner invested tens of millions of dollars to update and expand attractions and park facilities, Disney recovered its investment with attendance-building strategies. By creating a range of complementary services and entertainment at the park, customers stayed longer and spent more money. A plan was also put in place to develop Disney’s unused acreage and further maximize the profitability of these assets. One result of the above measures was that attendance at Tokyo Disneyland increased by 50% from 10.2m in 1983 to 15.8m in 1991.

This can ensure that at ‘peak’ times of the day, AHC will be making more revenue, but there may also be an increase during ‘off peak’ times. AHC must also make sure that because of the higher prices, they don’t face a loss of consumers if they do decide to use price discrimination. Option A displays such pricing in which additional charges may be given, however if AHC wishes to maintain its customer base, as well as attract more while prices are being raised, they may need to offer consumers extra services, discounts or deals such as ‘ 3 Pilates classes for the price of 2’ for women which will help maintain good relationships and loyalty with members in the long term.

Price discrimination can be defined as when the same good or service is sold at different prices to different consumers. If we look at this definition of price discrimination, for an example, we can show that price discrimination can be seen in the entrance tickets of parks such as Universal studios; this is due to the fact that there are discounts for children and senior citizens. (Phlips L. , 1983) However, this can be seen as not being discriminative at all due to the fact that if the price difference full reflects the difference in the cost of carrying the good from the seller’s location to the buyers’ location.

R. Preston McAfee, Price Discrimination, in 1 ISSUES IN COMPETITION LAW AND POLICY 465 (ABA Section of Antitrust Law 2008)

Hong Kong Disneyland was opened in September 2005 through a joint venture between the Walt Disney International and Hong Kong government. Disney has been on an international expansion since it first opened its park in 1980 in Japan and China being the most lucrative market, Disney decided to open the park in Hong Kong after selecting the city in the bidding process. The park was the first American park in Chinese territory.