Pricing of First-Run Movies in Small U.S. Metropolitan Areas: Multimarket Contact and Chain Effects

Robert Feinberg

The B.E. Journal of Economic Analysis & Policy, 2015, vol. 15, issue 1, 285-297

Abstract: In recent years, the role of multimarket contact (MMC) among firms in influencing market performance has been studied for a relatively small group of industries – with banking and airlines most often examined, though the cement and telecommunications industries have been studied as well. This paper investigates this issue for the local movie theater industry in the U.S., one not previously studied in this regard. In small U.S. metropolitan areas, there is considerable variation in the nature of MMC among theater chains (large and small), which allows us to examine whether MMC among firms has an impact on movie pricing in these smaller markets. Data on movie pricing, market structure, and income and population characteristics are obtained for 118 multi-screen first-run movie theaters in 79 small metropolitan areas – those with under 250,000 people – which are not part of larger “consolidated” metropolitan areas. Analysis provides evidence supportive of MMC effects but suggestive of its limited applicability.

Keywords: multi-market contact; price determination; movie theaters (search for similar items in EconPapers)
JEL-codes: L11 L22 L82 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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DOI: 10.1515/bejeap-2014-0070

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