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The Block Booking of Films Reexamined

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  • Hanssen, F Andrew

Abstract

Block booking, banned by the U.S. Supreme Court, involves selling motion pictures as a package. The most generally accepted explanation for the practice is that it prevented exhibitors from "oversearching"--from rejecting films revealed ex post to be of below-average value from an ex ante average-valued package. This article examines the way in which block booking developed, the nature of the optimization problem, and the specifics of block-booking contracts and finds little to support that hypothesis. Block booking emerged at a time when there was no over-searching problem, it was applied much more flexibly than a primary concern with oversearching would suggest, and exhibitors failed to make use of contractually permitted opportunities to behave in ways block booking was posited necessary to avoid. This article proposes instead that block booking was primarily intended to cheaply provide films in quantity, a claim made by movie producers of the time. Copyright 2000 by the University of Chicago.

Suggested Citation

  • Hanssen, F Andrew, 2000. "The Block Booking of Films Reexamined," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 395-426, October.
  • Handle: RePEc:ucp:jlawec:v:43:y:2000:i:2:p:395-426
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    File URL: http://dx.doi.org/10.1086/467460
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    References listed on IDEAS

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    1. 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.
    2. Ralph Cassady & Jr., 1933. "Some Economic Aspects of Motion Picture Production and Marketing," The Journal of Business, University of Chicago Press, vol. 6, pages 113-113.
    3. De Vany, Arthur S & Walls, W David, 1997. "The Market for Motion Pictures: Rank, Revenue, and Survival," Economic Inquiry, Western Economic Association International, vol. 35(4), pages 783-797, October.
    4. Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-641, August.
    5. Kerr, Catherine E., 1990. "Incorporating the Star: The Intersection of Business and Aesthetic Strategies in Early American Film," Business History Review, Cambridge University Press, vol. 64(03), pages 383-410, September.
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    Cited by:

    1. Doh-Shin Jeon & Domenico Menicucci, 2012. "Bundling and Competition for Slots," American Economic Review, American Economic Association, vol. 102(5), pages 1957-1985, August.
    2. Kálecz-Simon, András & Bakó, Barna, 2012. "Vertikális korlátozások - növelik vagy csökkentik a jólétet?. Érvek az irodalomból
      [Vertical constraints - do they increase or reduce welfare?. Arguments in the literature]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 1138-1159.
    3. Ricard Gil & Wesley Hartmann, 2007. "The Role and Determinants of Concession Sales in Movie Theaters: Evidence from the Spanish Exhibition Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 30(4), pages 325-347, June.
    4. Jeon, Doh-Shin & Menicucci, Domenico, 2009. "Bundling and Competition for Slots: On the Portfolio Effects of Bundling," IDEI Working Papers 574, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jul 2011.
    5. Darlene Chisholm, 2005. "Hollywood Economics: How Extreme Uncertainty Shapes The Film Industry," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 29(3), pages 233-237, August.
    6. Fleck, Robert K. & Hanssen, F. Andrew, 2016. "Persistence and change in age-specific gender gaps: Hollywood actors from the silent era onward," International Review of Law and Economics, Elsevier, vol. 48(C), pages 36-49.
    7. Orbach, Barak Y. & Einav, Liran, 2007. "Uniform prices for differentiated goods: The case of the movie-theater industry," International Review of Law and Economics, Elsevier, vol. 27(2), pages 129-153.
    8. F. Andrew Hanssen, 2010. "Vertical Integration during the Hollywood Studio Era," Journal of Law and Economics, University of Chicago Press, vol. 53(3), pages 519-543.
    9. Jeon, Doh-Shin & Menicucci, Domenico, 2009. "Bundling and Competition for Slots: Sequential Pricing," TSE Working Papers 09-074, Toulouse School of Economics (TSE).
    10. Darlene C Chisholm, 2011. "Motion Pictures," Chapters,in: A Handbook of Cultural Economics, Second Edition, chapter 39 Edward Elgar Publishing.
    11. Mitsuru Sunada, 2010. "Vertical Integration in the Japanese Movie Industry," Journal of Industry, Competition and Trade, Springer, vol. 10(2), pages 135-150, June.
    12. Jehoshua Eliashberg & Anita Elberse & Mark A.A.M. Leenders, 2006. "The Motion Picture Industry: Critical Issues in Practice, Current Research, and New Research Directions," Marketing Science, INFORMS, vol. 25(6), pages 638-661, 11-12.
    13. Darren Filson, 2003. "Dynamic Common Agency, Vertical Integration, and Investment: The Economics of Movie Distribution," Claremont Colleges Working Papers 2003-07, Claremont Colleges.
    14. Kenney, Roy W & Klein, Benjamin, 2000. "How Block Booking Facilitated Self-Enforcing Film Contracts," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 427-435, October.
    15. Ricard Gil, 2015. "Does Vertical Integration Decrease Prices? Evidence from the Paramount Antitrust Case of 1948," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 162-191, May.
    16. Silver, Gregory Mead, 2010. "Economic effects of vertical disintegration: the American motion picture industry, 1945 to 1955," Economic History Working Papers 30043, London School of Economics and Political Science, Department of Economic History.

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