Asset Specificity and Long-Term Contracts: The Case of the Motion-Pictures Industry

Darlene Chisholm
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Darlene Chisholm: Lehigh University

Eastern Economic Journal, 1993, vol. 19, issue 2, 143-155

Abstract: The proliferation of long-term contractual arrangements between actors and studios in the U.S. motion-pictures industry during the Age of the Studio (1929-48) is analyzed. Asset specificity and transaction-cost minimization explain the optimality of long-term over short-term agreements. In particular, the following historical factors prove to have been pivotal in increasing the degree of relationship-specific investment and decreasing the costs of transacting: the high degree of both industrial concentration and vertical integration; the prevalence of a star-promotion system; the U.S. v. Paramount antitrust litigation; and the rise of television as a substitute form of entertainment.

Keywords: Contracts; Motion Picture; Transactions (search for similar items in EconPapers)
JEL-codes: L14 L82 (search for similar items in EconPapers)
Date: 1993
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:19:y:1993:i:2:p:143-155

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