Dynamic Common Agency and Investment: The Economics of Movie Distribution

Darren Filson

Economic Inquiry, 2005, vol. 43, issue 4, 773-784

Abstract: This article analyzes investment and other strategies in a stationary dynamic common agency model of movie distribution. Contract choices interact with other strategic choices. The model explains several facts; movie distributors avoid head-to-head new hit releases, hits have longer runs than flops, and distributors receive the lion's share of value generated by hits. The model yields testable implications about the effects of vertical integration on inventory turnover, release decisions, run lengths, and allocations, but the results depend on how integration affects relative bargaining power. Vertical integration is privately profitable and may improve social welfare even though it reduces industry profits. (JEL L14, L22, L82, C61) Copyright 2005, Oxford University Press.

JEL-codes: C61 L14 L22 L82 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (8)

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