The region coding is a licensing and content issue. It's for controlling region-specific release dates, for issuing versions of the film edited to comply with a particular region's ethics guidelines, or as a way to get the proper PAL/NTSC formatting to the correct markets. The pricing is a function of demand in that region's particular market and the vagaries of any taxes, tariffs, or agreements with the powers that be in those markets.
Quality bootleg stuff has become an even more tremendous-er headache since studios began using overseas facilities to press the disks. They ship the data to an overseas production facility that presses the DVDs, shipping the finished product back to the studios in the US. Unfortunately some of these production facilities have a little trouble maintaining decent security on their customer's products, giving less than scrupulous individuals/groups a HUGE opportunity to get their hands on studio-direct source material. Once they have the coding they can make as many disks as they please, and very high quality ones as they are using the studio coding to master their products. They can also conveniently sidestep that pesky problem of copyright compliance and remittance of royalties. China is the main offender as their govt likes the millions of foreign dollars it brings into their economy. As a result they tend to turn a blind eye to the practice until it becomes politically advantagous for them to take corrective action.
Brad
