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At the Movies: Risk Sharing and the Economics of Exhibition Contracts

Author

Listed:
  • Darren Filson

    (Claremont Graduate University)

  • Fernando Fabre

    (Universidad Anahuac del Sur)

  • Alfredo Nava

    (Universidad Anahuac del Sur)

  • Paola Rodriguez

    (Universidad Anahuac del Sur)

Abstract

The 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.

Suggested Citation

  • Darren Filson & Fernando Fabre & Alfredo Nava & Paola Rodriguez, 2001. "At the Movies: Risk Sharing and the Economics of Exhibition Contracts," Claremont Colleges Working Papers 2001-01, Claremont Colleges.
  • Handle: RePEc:clm:clmeco:2001-01
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    File URL: http://www.claremontmckenna.edu/rdschool/papers/2001-01.pdf
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    Cited by:

    1. 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.
    2. Darren Filson, 2003. "Dynamic Common Agency, Vertical Integration, and Investment: The Economics of Movie Distribution," Claremont Colleges Working Papers 2003-07, Claremont Colleges.

    More about this item

    Keywords

    principal agent; licensing; entertainment; film; rental;

    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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