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Does Vertical Integration Enhance Non-Price Efficiency? Evidence from the Movie Theater Industry

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  • In Kyung Kim

    (Nazarbayev University)

  • Vladyslav Nora

    (Nazarbayev University)

Abstract

This paper examines how integration between distribution and exhibition in the movie theater industry affects non-price efficiency. We find evidence that integrated theaters may be more efficient than independent ones at picking movies to screen and allocating seats across them. To explain our finding, we provide a model showing that the efficiency increases with a theater chain size, while the effect of vertical integration itself is ambiguous. Comparing efficiency across chains suggests that the effect of vertical integration per se is insignificant, and observed efficiency gains can be attributed to the large size of integrated theater chains

Suggested Citation

  • In Kyung Kim & Vladyslav Nora, 2017. "Does Vertical Integration Enhance Non-Price Efficiency? Evidence from the Movie Theater Industry," Working Papers 1701, Nazarbayev University, Department of Economics, revised Feb 2018.
    • Handle: RePEc:naz:wpaper:1701
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    References listed on IDEAS

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    Cited by:

    1. Jaedo Choi & Yun Jeong Choi & Minki Kim, 2017. "Vertical Foreclosure with Product Choice and Allocation: Evidence from the Movie Industry," Working papers 2017rwp-107, Yonsei University, Yonsei Economics Research Institute.

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    More about this item

    Keywords

    vertical integration; efficiency; movie theater industry;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • 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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