04 December 2015
Amusement Parks poke holes in your wallet
We've probably all been to amusement parks. Disney theme parks have some of the highest profits. Disneyland Paris, for example, has generated $700 million in profits opening in 1992.
Disneyworld plays out various strategic schemes that makes us believe that they are offering the best deals, and we fall for them. Every. Single. Time. Most of these strategies can be explained through microeconomic reasoning. These theories are played with us before we even enter these amusement parks.
Price discrimination is played with in various ways to its consumers, specifically third degree price discrimination. This means that they offer special prices to special groups. The most common and obvious price discrimination is to age groups. Disneyland offers different prices for kids and for adults everyone. Although to us, it may seem rather normal that kids are cheaper than adults. But why? Don’t we all benefit from the same entertainment that they offer? We all eat the same things (that are over-priced may I add – but more about that later). But the logical reason is by making kids cheaper – although not be a huge amount – is because it will attract more families, as Disneyland is a family based.
And now lets briefly look at what happens when we finally enter these magical Disney amusement parks. Because once we enter, we have entered a monopoly; a monopoly over everything. Whether it is food, drinks, merchandise, toilets or any other service we can purchase. This is because if we want to buy anything, the only place we can buy something is from them, as there are no substitutes or cheaper choices available to us. So we have no option but to buy food and drinks from there and from them, thus, setting its prices way above average (but somehow still keeping its integrity). Just like their merchandise, there is no other place where we can buy “the real deal”, so we are likely to buy it there, especially tourist as its an experience to remember. Yet again, Disneyland is able to maximize their profits.
Bottom Line: Disney’s amusements park will always win and maximize its profits due to its innovative and strategic microeconomic theories that they play on us, its consumers, on a daily basis. There is no escaping or saving our money if we want to enjoy a day at their amusement parks.
* Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.