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in a saturated, competitive market suppliers can compete by lowering their prices. A reduction in production cost means they can do so without reducing margins. Are you saying this intuition incorrect more times than not?

in a saturated, competitive market suppliers can compete by lowering their prices. A reduction in production cost means they can do so without reducing margins. Are you saying this intuition is incorrect more times than not?

Not "more times than not", just "not in the case of movies". Taking two arbitrary examples of science-fiction movies, there is no price point, not even 0, at which "Under the Skin" (budget 13 million USD, and which made a loss at the box office) could have achieved the same number of bums on seats as "The Force Awakens" (budget 200 million, box office north of 1.5 billion and still counting). The former is either a niche product, or an inferior product, or both, and if you could draw up the demand curves of the two movies they'd be drawing on completely different demand: these aren't "the same goods". Further, you would not find a strategy by which either of them gets anything much out of competing with each other on price. Not that they were even in the cinema at the same time, but even if they had been they are too distinct to use a simple model of a customer looking at both and picking the cheaper, despite the fact that individual customers do frequently find themselves in a cinema picking a movie. If there was a means by which "Under the Skin" could satisfy all that "Force Awakens" demand, then sure, it would seriously look into means of doing so, but they aren't fungible commodities.

Not "more times than not", just "not in the case of movies". Taking two arbitrary examples of science-fiction movies, there is no price point, not even 0, at which "Under the Skin" (budget 13 million USD, and which made a loss at the box office) could have achieved the same number of bums on seats as "The Force Awakens" (budget 200 million, box office north of 1.5 billion and still counting). The former is either a niche product, or an inferior product, or both, and if you could draw up the demand curves of the two movies they'd be drawing on completely different demand: these aren't "the same goods". Further, you would not find a strategy by which either of them gets anything much out of competing with each other on price. Not that they were even in the cinema at the same time, but even if they had been they are too distinct to use a simple model of a customer looking at both and picking the cheaper, despite the fact that individual customers do frequently find themselves in a cinema picking a movie. If there was a means by which "Under the Skin" could satisfy all that "Force Awakens" demand, then sure, it would seriously look into it, but they aren't fungible commodities.

On a loosely-related topic, note that cinemas in any case try to cater to a lot of price sensitivity among customers, by giving them the opportunity to drop a heap of cash on food and drink. Therefore (within a certain range) customers who might be tempted to see a cheaper movie than the average are in fact already in the door. They just aren't having popcorn.

Not "more times than not", just "not in the case of movies". Taking two arbitrary examples of science-fiction movies, there is no price point, not even 0, at which "Under the Skin" (budget 13 million USD, and which made a loss at the box office) could have achieved the same number of bums on seats as "The Force Awakens" (budget 200 million, box office north of 1.5 billion and still counting). The former is either a niche product, or an inferior product, or both, and if you could draw up the demand curves of the two movies you would not find a strategy by which either of them gets anything out of competing with each other on price. Not that they were even in the cinema at the same time, but even if they had been they are too distinct to use a simple model of a customer looking at both and picking the cheaper.

Not "more times than not", just "not in the case of movies". Taking two arbitrary examples of science-fiction movies, there is no price point, not even 0, at which "Under the Skin" (budget 13 million USD, and which made a loss at the box office) could have achieved the same number of bums on seats as "The Force Awakens" (budget 200 million, box office north of 1.5 billion and still counting). The former is either a niche product, or an inferior product, or both, and if you could draw up the demand curves of the two movies they'd be drawing on completely different demand: these aren't "the same goods". Further, you would not find a strategy by which either of them gets anything much out of competing with each other on price. Not that they were even in the cinema at the same time, but even if they had been they are too distinct to use a simple model of a customer looking at both and picking the cheaper, despite the fact that individual customers do frequently find themselves in a cinema picking a movie. If there was a means by which "Under the Skin" could satisfy all that "Force Awakens" demand, then sure, it would seriously look into means of doing so, but they aren't fungible commodities.