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Competition at the big screen: A case study in capitalism

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When I moved to Jackson, Tenn, in 2010, I found that I had come to the worst movie theater town I’d ever lived in.

We had a 16-screen theater that was dirty and run down with uncomfortable seating. To accompany it, we had a newer facility on the edge of town that was clearly meant to be higher concept, but struggled right away and seemed to quickly give up on excellence. I don’t know if things started this way, but the two theaters came to operate under the same management.

In the lobbies of both places, moviegoers noted a series of non-functioning video games. The bathroom of the larger theater was so bad as to be virtually scandalous. For some unexplained reason, the newer theater stopped taking credit cards and insisted visitors either bring cash or pay a fee to use their lobby ATM. When I went to see the second installment of Guardians of the Galaxy, the screen never fully focused. We asked for the employees to fix the problem and were told we could either stay and endure the issue or leave with a refund. We gritted our teeth and watched the blurry screen.

And then something wonderful happened. Recognizing the opportunity, a new theater owner entered the business. He planned to bring state-of-the-art sound and images, soft, reclining seats, and a new level of refreshments. We all watched, excited and grateful for an entrepreneur who was ready to make things better. He delivered. The new theater is beautiful. You can pick your seats when you buy a ticket. Credit cards are no problem.

And what do you know? The other theaters had to adapt to the new competitive situation. The one on the outskirts of town became a discount theater with all movies for $6. The flagship with sixteen screens radically upped their game with a redesigned lobby, new paint, new floors, new bathrooms, seat reservations, and more.

None of this would have happened without competition, and that’s what free markets provide. If the existing business owners don’t serve people well enough to really earn their business, an opening exists for new entrants.

That’s exactly what happened in Jackson. We’re all benefitting now.

Image: CC0 Public Domain

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Hunter Baker Hunter Baker, J.D., Ph.D. is a professor of political science and the dean of arts and sciences at Union University and an Affiliate Scholar in religion & politics at the Acton Institute. He is the author of The End of Secularism and Political Thought: A Student's Guide.

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