Government Intervention to Prevent Bankruptcy: The Effect of Blind-Bidding Laws on Movie Theaters

James G. Mulligan () and Daniel J. Wedzielewski ()
Additional contact information
James G. Mulligan: Department of Economics,University of Delaware
Daniel J. Wedzielewski: JPMorganChase

No 09-07, Working Papers from University of Delaware, Department of Economics

Abstract: In the 1970s motion picture studios used blind bidding and non-refundable guarantees to reduce the risks of producing large budget films. However, theater owners claimed that blind bidding and guarantees shifted the risk to them and increased the likelihood of bankruptcy. In response to lobbying by theater owners, twenty-four states passed laws banning blind bidding between 1978 and 1984, while seven states also banned non-refundable guarantees. We find that the laws were not only ineffective in keeping theater owners from exiting the market; they may have been detrimental to theater owners converting to multiplexes at that time.

Keywords: bankruptcy; blind bidding; vertical contractual relationships; government intervention. (search for similar items in EconPapers)
JEL-codes: L1 L2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his, nep-reg and nep-rmg
Date: 2009

Downloads: (external link)
http://www.lerner.udel.edu/sites/default/files/imc ... 2009/UDWP2009-07.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:dlw:wpaper:09-07.

Access Statistics for this paper

More papers in Working Papers from University of Delaware, Department of Economics
Contact information at EDIRC.
Series data maintained by Saul Hoffman ().