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At the Movies: Avoiding Head-to-Head Competition on the Big Screen: The Economics of Movie Distribution

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Author Info

  • Darren Filson

    (Claremont Graduate University)

  • Fernando Fabre

    (Universidad Anahuac del Sur)

  • Alfredo Nava

    (Universidad Anahuac del Sur)

  • Paola Rodriguez

    (Universidad Anahuac del Sur)

Abstract

This paper provides theoretical explanations for devices that movie distributors use to avoid head-to-head competition. We use a simple static model to show how revenuse sharing exhibition contracts providex multiplex owners with incentives to take cross effects on demand into account. Then we simulate a dynamic version of the model to explian the practice of staggering the release dates of hit movies and consider how vertical integration affects release patterns and the allocation of movies to screens. The dynamic model is of independent interest because it allows for dynamic strategic interaction in a common agency framework.

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Bibliographic Info

Paper provided by Claremont Colleges in its series Claremont Colleges Working Papers with number 2000-32.

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Handle: RePEc:clm:clmeco:2000-32

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Keywords: common agent; exclusive dealing; entertainment; film; licensing;

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  1. B. Douglas Bernheim & Michael D. Whinston, 1996. "Exclusive Dealing," NBER Working Papers 5666, National Bureau of Economic Research, Inc.
  2. Bernheim, B Douglas & Whinston, Michael D, 1986. "Common Agency," Econometrica, Econometric Society, vol. 54(4), pages 923-42, July.
  3. De Vany, A. & Walls, W.D., 1999. ""Uncertainty in the Movies: Does Star Power Reduce the Terror of the Box Office?"," Papers 98-99-10, California Irvine - School of Social Sciences.
  4. De Vany, Arthur & Walls, W David, 1996. "Bose-Einstein Dynamics and Adaptive Contracting in the Motion Picture Industry," Economic Journal, Royal Economic Society, vol. 106(439), pages 1493-1514, November.
  5. Aghion, Philippe & Bolton, Patrick, 1987. "Contracts as a Barrier to Entry," American Economic Review, American Economic Association, vol. 77(3), pages 388-401, June.
  6. Thomas E. Borcherding & Darren Filson, . "Conflicts of Interest in the Hollywood Film Industry: Coming to America - Tales from the Casting Couch, Gross and Net, in a Risky Business," Claremont Colleges Working Papers 2000-07, Claremont Colleges.
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