At the Movies: Risk Sharing and the Economics of Exhibition Contracts
AbstractThe current literature on sharing contracts emphasizes the importance of asymmetric information and typically assumes that one party is risk neutral while the other is risk averse. This paper describes a real-world contract that is widely used - the movie exhibition contract - and argues that asymmetric information is not the main feature of the environment that leads to sharing. The explanation that fits the facts better is simply that distributors and exhibitors are both risk averse. The analysis suggests that two-sided risk aversion is important in determining contracts.
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Bibliographic InfoPaper provided by Claremont Colleges in its series Claremont Colleges Working Papers with number 2001-01.
Date of creation: Jan 2001
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principal agent; licensing; entertainment; film; rental;
Find related papers by JEL classification:
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
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- De Vany, Arthur S. & Walls, W. David, 2004. "Motion picture profit, the stable Paretian hypothesis, and the curse of the superstar," Journal of Economic Dynamics and Control, Elsevier, vol. 28(6), pages 1035-1057, March.
- Darren Filson, 2003. "Dynamic Common Agency, Vertical Integration, and Investment: The Economics of Movie Distribution," Claremont Colleges Working Papers 2003-07, Claremont Colleges.
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