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The Block Booking of Films Reexamined

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  • Hanssen, F Andrew

Abstract

Block booking, banned by the U.S. Supreme Court, involves selling motion pictures as a package. The most generally accepted explanation for the practice is that it prevented exhibitors from "oversearching"--from rejecting films revealed ex post to be of below-average value from an ex ante average-valued package. This article examines the way in which block booking developed, the nature of the optimization problem, and the specifics of block-booking contracts and finds little to support that hypothesis. Block booking emerged at a time when there was no over-searching problem, it was applied much more flexibly than a primary concern with oversearching would suggest, and exhibitors failed to make use of contractually permitted opportunities to behave in ways block booking was posited necessary to avoid. This article proposes instead that block booking was primarily intended to cheaply provide films in quantity, a claim made by movie producers of the time. Copyright 2000 by the University of Chicago.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Law & Economics.

Volume (Year): 43 (2000)
Issue (Month): 2 (October)
Pages: 395-426

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Handle: RePEc:ucp:jlawec:v:43:y:2000:i:2:p:395-426

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Web page: http://www.journals.uchicago.edu/JLE/

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Cited by:
  1. Jeon, Doh-Shin & Menicucci, Domenico, 2009. "Bundling and Competition for Slots: On the Portfolio Effects of Bundling," IDEI Working Papers 574, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jul 2011.
  2. Gregory Mead Silver, 2010. "Economic effects of vertical disintegration: the American motion picture industry, 1945 to 1955," Economic History Working Papers 30043, London School of Economics and Political Science, Department of Economic History.
  3. Darren Filson, 2003. "Dynamic Common Agency, Vertical Integration, and Investment: The Economics of Movie Distribution," Claremont Colleges Working Papers 2003-07, Claremont Colleges.
  4. Doh-Shin Jeon & Domenico Menicucci, 2012. "Bundling and Competition for Slots," American Economic Review, American Economic Association, vol. 102(5), pages 1957-85, August.
  5. Mitsuru Sunada, 2010. "Vertical Integration in the Japanese Movie Industry," Journal of Industry, Competition and Trade, Springer, vol. 10(2), pages 135-150, June.
  6. Jeon, Doh-Shin & Menicucci, Domenico, 2009. "Bundling and Competition for Slots: Sequential Pricing," TSE Working Papers 09-074, Toulouse School of Economics (TSE).
  7. Bakó, Barna & Kálecz-Simon, András, 2012. "Vertikális korlátozások - növelik vagy csökkentik a jólétet?. Érvek az irodalomból
    [Vertical constraints - do they increase or reduce welfare?. Arguments in the literature]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 1138-1159.
  8. Darlene Chisholm, 2005. "Hollywood Economics: How Extreme Uncertainty Shapes The Film Industry," Journal of Cultural Economics, Springer, vol. 29(3), pages 233-237, August.
  9. Ricard Gil & Wesley Hartmann, 2007. "The Role and Determinants of Concession Sales in Movie Theaters: Evidence from the Spanish Exhibition Industry," Review of Industrial Organization, Springer, vol. 30(4), pages 325-347, June.

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