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Title:Dynamic Common Agency, Vertical Integration, and Investment : The Economics of Movie Distribution PDF Logo
Authors:Filson, Darren
Issue Date:2003
Series/Report no.:Working paper series / Claremont McKenna College 03,07
Abstract:This paper analyzes the impact of vertical integration on investment and other strategies in a dynamic common agency framework. Movie distribution is used as a motivating example. The model matches several facts about movie distribution; 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. Welfare comparisons show that integration is privately profitable and may improve social welfare even though it reduces industry profits. The effects of integration on strategies and welfare depend critically on how integration affects the bargaining power of the non-integrated firm.
Subjects:common agency
exclusive dealing
entertainment
film
licensing
JEL:L14
L22
L82
C61
Document Type:Working Paper
Appears in Collections:Claremont Colleges Working Papers in Economics, Department of Economics, Claremont McKenna College

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