Economic effects of vertical disintegration: the American motion picture industry, 1945 to 1955
AbstractIn 1948, the United States Supreme Court declared the operations of eight of the nation’s largest motion picture studios in violation of the 1890 Sherman Antitrust Act. The decision ordered them to disintegrate their producer-distributor roles from cinemas. The Court believed this would promote competitive practices in a hitherto uncompetitive industry. However, these desired benefits were not entirely reached. Instead, by leading the Hollywood studio system to collapse, the Court also distorted the supplychain for motion pictures. This work utilizes Coasian analyses of transaction costs to show that institutional integration was an efficient structure for the motion picture industry. It explores the motives to integrate and the benefits it garnered. Having laid this groundwork, it then assesses the effects theatre divorcement had on the industry and offers plausible counterfactuals had the studios remained intact after 1948.
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Bibliographic InfoPaper provided by London School of Economics and Political Science, Department of Economic History in its series Economic History Working Papers with number 30043.
Length: 126 pages
Date of creation: Nov 2010
Date of revision:
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Find related papers by JEL classification:
- N0 - Economic History - - General
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-05-30 (All new papers)
- NEP-COM-2011-05-30 (Industrial Competition)
- NEP-HIS-2011-05-30 (Business, Economic & Financial History)
- NEP-HME-2011-05-30 (Heterodox Microeconomics)
- NEP-REG-2011-05-30 (Regulation)
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