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Asset Specificity and Long-Term Contracts: The Case of the Motion-Pictures Industry

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Author Info
Darlene C. Chisholm (Lehigh University)
Abstract

The proliferation of long-term contractual arrangements between actors and studios in the U.S. motion-pictures industry during the Age of the Studio (1929-48) is analyzed. Asset specificity and transaction-cost minimization explain the optimality of long-term over short-term agreements. In particular, the following historical factors prove to have been pivotal in increasing the degree of relationship-specific investment and decreasing the costs of transacting: the high degree of both industrial concentration and vertical integration; the prevalence of a star-promotion system; the U.S. v. Paramount antitrust litigation; and the rise of television as a substitute form of entertainment.

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File URL: http://college.holycross.edu/eej/Volume19/V19N2P143_155.pdf
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Publisher Info
Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

Volume (Year): 19 (1993)
Issue (Month): 2 (Spring)
Pages: 143-155
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Handle: RePEc:eej:eeconj:v:19:y:1993:i:2:p:143-155

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Related research
Keywords: Contracts Motion Picture Transactions

Find related papers by JEL classification:
L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Masten, Scott E & Crocker, Keith J, 1985. "Efficient Adaptation in Long-term Contracts: Take-or-Pay Provisions for Natural Gas," American Economic Review, American Economic Association, vol. 75(5), pages 1083-93, December. [Downloadable!] (restricted)
  2. Crawford, Vincent P, 1988. "Long-term Relationships Governed by Short-term Contracts," American Economic Review, American Economic Association, vol. 78(3), pages 485-99, June. [Downloadable!] (restricted)
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  3. Joskow, Paul L, 1985. "Vertical Integration and Long-term Contracts: The Case of Coal-burning Electric Generating Plants," Journal of Law, Economics and Organization, Oxford University Press, vol. 1(1), pages 33-80, Spring.
    Other versions:
  4. Cheung, Steven N S, 1983. "The Contractual Nature of the Firm," Journal of Law & Economics, University of Chicago Press, vol. 26(1), pages 1-21, April.
  5. Mulherin, J Harold, 1986. "Complexity in Long-term Contracts: An Analysis of Natural Gas Contractual Provisions," Journal of Law, Economics and Organization, Oxford University Press, vol. 2(1), pages 105-17, Spring.
  6. Riordan, Michael H. & Williamson, Oliver E., 1985. "Asset specificity and economic organization," International Journal of Industrial Organization, Elsevier, vol. 3(4), pages 365-378, December. [Downloadable!] (restricted)
  7. Crocker, Keith J & Masten, Scott E, 1991. "Pretia ex Machina? Prices and Process in Long-Term Contracts," Journal of Law & Economics, University of Chicago Press, vol. 34(1), pages 69-99, April.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ricard Gil & Pablo T. Spiller, 2007. "The Organizational Implications of Creativity: The US Film Industry in Mid-XXth Century," NBER Working Papers 13253, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Ch'ng, Kean Siang, 2007. "Evolutionary Concept, Genetic Algorithm and Exhibition Contract in Movie Industry," MPRA Paper 5387, University Library of Munich, Germany, revised 19 Oct 2007. [Downloadable!]
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