Many movie theaters charge a lower price for children and
senior citizens than for other patrons. This fact is hard to explain in a competitive
market. In a competitive market, price equals marginal cost, and the marginal cost
of providing a seat for a child or senior citizen is the same as the marginal cost of
providing a seat for anyone else. Yet this fact is easily explained if movie theaters
have some local monopoly power and if children and senior citizens have a lower