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The Effect of Local Competition on Admission Prices in the U.S. Motion Picture Exhibition Market

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  • Davis, Peter

Abstract

This paper provides empirical evidence on the relationship between local market structure and the prices charged to consumers in the U.S. motion picture exhibition market. I find that there is a statistically significant relationship between the geographic distribution of movie theaters in a market and the admission prices that they are able to charge. However, the magnitude of the price-reducing effect of local competition appears to be economically modest. Moreover, I find no evidence that increases in geographic concentration lead to increased adult admission prices. The findings are directly relevant to merger policy in the industry and pertinent because of the dramatic changes in industry structure resulting from mergers that occurred during 2002. I conclude that the available evidence suggests that popular and governmental concerns about horizontal mergers in the industry leading to dramatically increased admission prices are likely misplaced.

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Bibliographic Info

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

Volume (Year): 48 (2005)
Issue (Month): 2 (October)
Pages: 677-708

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Handle: RePEc:ucp:jlawec:y:2005:v:48:i:2:p:677-708

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

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Cited by:
  1. Sauer, Johannes & Gorton, Matthew & White, John, 2011. "Marketing, Cooperatives and Price Heterogeneity: Evidence from the CIS Dairy Sector," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114489, German Association of Agricultural Economists (GEWISOLA).
  2. Luca Aguzzoni & Elena Argentesi & Lorenzo Ciari & Tomaso Duso & Massimo Tognoni, 2013. "Ex-Post Merger Evaluation in the UK Retail Market for Books," Discussion Papers of DIW Berlin 1310, DIW Berlin, German Institute for Economic Research.
  3. Ganesh Iyer & P. Seetharaman, 2008. "Too close to be similar: Product and price competition in retail gasoline markets," Quantitative Marketing and Economics, Springer, vol. 6(3), pages 205-234, September.
  4. Sault, Joanne & Toivanen, Otto & Waterson, Michael, 2003. "Learning and Location," The Warwick Economics Research Paper Series (TWERPS) 693, University of Warwick, Department of Economics.
  5. Beckert, Walter & Mazzarotto, Nicola, 2010. "Price-concentration analysis in merger cases with differentiated products," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 4(16), pages 1-23.
  6. Abe Dunn, 2009. "Does Competition Among Medicare Advantage Plans Matter?: An Empirical Analysis of the Effects of Local Competition in a Regulated Environment," EAG Discussions Papers 200905, Department of Justice, Antitrust Division.
  7. Böhme, Enrico & Müller, Christopher, 2009. "Searching for the Concentration-Price Effect in the German Movie Theater Industry," MPRA Paper 15315, University Library of Munich, Germany.
  8. Müller, Christopher & Böhme, Enrico, 2011. "A note on the relationship of mainstream and art house movie theaters," MPRA Paper 27908, University Library of Munich, Germany.
  9. Takahashi, Yuya, 2013. "Estimating a War of Attrition: The Case of the U.S. Movie Theater Industry," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 424, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  10. Robert M. Feinberg, 2013. "Price Effects of Multimarket Contact Among Movie Chains in Small U.S. Metropolitan Areas," Working Papers 2013-15, American University, Department of Economics.

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