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The Strategic Effects of Vertical Market Structure: Common Agency and Divisionalization in the US Motion Picture Industry

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  • Kenneth S. Corts

Abstract

I examine the release‐date scheduling of all motion pictures that went into wide release in the US in 1995 and 1996 to investigate the effects of vertical market structure on competition. The evidence suggests that complex vertical structures involving multiple upstream or downstream firms generally do not achieve efficient outcomes in movie scheduling. In addition, analysis of the data suggests that the production divisions of the major studios act as integrated parts of the studio, rather than as independent competing firms.

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  • Kenneth S. Corts, 2001. "The Strategic Effects of Vertical Market Structure: Common Agency and Divisionalization in the US Motion Picture Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(4), pages 509-528, December.
    • Handle: RePEc:bla:jemstr:v:10:y:2001:i:4:p:509-528
    DOI: 10.1111/j.1430-9134.2001.00509.x
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    3. Chisholm, Darlene C, 1997. "Profit-Sharing versus Fixed-Payment Contracts: Evidence from the Motion Pictures Industry," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 13(1), pages 169-201, April.
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    6. McAfee, R Preston & Schwartz, Marius, 1994. "Opportunism in Multilateral Vertical Contracting: Nondiscrimination, Exclusivity, and Uniformity," American Economic Review, American Economic Association, vol. 84(1), pages 210-230, March.
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