analyzing the welfare impacts of full line forcing contracts theoretical investigations have examined both anti competitive and efficiency inducing rationales for vertical bundling making empirical evidence important to understanding its welfare implications we use an extensive dataset on full line forcing contracts between movie distributors and video retailers to empirically measure the impact of vertical bundling on welfare we identify and measure three primary effects of full line forcing contracts market coverage leverage and efficiency we find that bundling increases market coverage and efficiency but has little impact on one distributor s gaining leverage over another as a result we estimate that full line forcing contracts increased consumer and producer surplus in this application

how video rental patterns change as consumers move online how will consumption patterns for popular and long tail products change when consumers move from brick and mortar to internet markets we address this question using customer level panel data obtained from a national video rental chain as it was closing many of its local stores these data allow us to use the closure of a consumer s local video store as an instrument breaking the inherent endogeneity between channel choice and product choice our results suggest that when consumers move from brick and mortar to online channels they are significantly more likely to rent niche titles relative to blockbusters this suggests that a significant amount of niche product consumption online is due to the direct influence of the channel on consumer behavior not just due to selection effects from the types of consumers who decide to use the internet channel or the types of products that consumers decide to purchase online this paper was accepted by pradeep chintagunta marketing

research on the motion picture industry state of the art and new directions off the beaten track away from theatrical release the motion picture industry has been subject of extensive academic research over the last decades however most scholars focused on the u s theatrical motion picture market the number of research activities regarding even more profitable release windows such as home video or television has been substantially lower although international distribution is essential for a motion picture project to break even there has been little significant re search on most other markets this paper aims at summarizing the current state of research on the motion picture industry particularly from marketing and management perspective revealing research gaps and proposing recommendations for future research endeavors therefore a three pillar scheme is developed to systemize previous findings research on intraorganizational decision making contractual relationships between national stakeholders and international market competition are differentiated since these insights are mainly derived from u s theatrical exhibition they can hardly be applied to other markets and exhibition windows thus potential research areas are identified to expand knowledge of posttheatrical and international markets

vertical integration market foreclosure and consumer welfare in the cable television industry i examine the effects of vertical integration between programming and distribution in the cable television industry i assess the effects of ownership structure on program offerings prices and subscriptions and i compare consumer welfare across integrated and unintegrated markets the results of this analysis suggest two general conclusions first integrated operators tend to exclude rival program services suggesting that certain program services cannot gain access to the distribution networks of vertically integrated cable system operators second vertical integration does not harm and may actually benefit consumers because of the associated efficiency gains

vertical contracts in the video rental industry a large body of theoretical work has explored the channels through which vertical contracts can induce efficiency improvements however it is also important to study vertical contracts empirically in order to gain insight into the relative size of different types of efficiency gains in this paper i empirically analyse a contractual innovation in the vertically separated video rental industry prior to 1998 video stores obtained inventory from movie distributors using simple linear pricing contracts in 1998 revenuesharing contracts were widely adopted i investigate the effect of the introduction of revenue sharing contracts on firms profits and consumer welfare i analyse a new panel data set of home video retailers that includes information on individual retailers contract and inventory choices as well as rentals and contract terms for 246 movie titles and 6137 retailers in the u s during each week of 1998 and 1999 and the first half of 2000 a structural econometric model of firms behaviour is developed that describes the nature of firms contract choices estimates from this model indicate that both upstream and downstream profits increase by 10 under the revenue sharing contract for popular titles for less popular titles the effects can be even larger i also estimate that consumers benefit when revenue sharing contracts are adopted

bose einstein dynamics and adaptive contracting in the motion picture industry audiences discover what films they like and spread the word information feedback produces bose einstein dynamics in the motion picture box office revenue distribution information cascades generate box office hits and flops the revenue distribution evolves recursively over the run as a mixture of the opening and a stochastic competition among films the motion picture run is decentralized adaptive and self organizing semistationary admission prices local information and contingency rich contracts match the film rental price and the supply of theatrical engagements to demand copyright 1996 by royal economic society

motion picture profit the stable paretian hypothesis and the curse of the superstar abstract this paper investigates the stable distribution as a model of profit in motion pictures the skew of this distribution and its paretian tails capture with great fidelity the statistics of the movies features of the business such as the nobody knows principle the curse of the superstar the angel s nightmare the instability of profit and the form of artist contracts follow from the properties of the stable distribution

auctions with constrained information blind bidding for motion pictures toward explaining why movie exhibitors have sought legislation requiring distributors to trade screen films before soliciting bids a simulation of a nash equilibrium in an auction suggests that without previews bidders may suffer losses i n expected utility this supports the hypothesis that risk aversion a nd competition render exhibitors unable to reduce their bids enough t o compensate fully for the dearth of information an error components model is used to analyze a unique industry dataset the results conf irm that a component of the bid is lower raising mean return while the variance of return is greater for blindly licensed films copyright 1988 by mit press

revenue sharing and vertical control in the video rental industry revenue sharing contracts in which retailers pay a royalty on sales to their suppliers are now widely used in the video rental industry we show that revenue sharing is valuable in vertically separated industries in which demand is either stochastic unpredictable or variable e g systematically declining downstream inventory is chosen before demand is realized and downstream firms engage in intrabrand competition unlike two part tariffs revenue sharing achieves the first best outcome by softening retail price competition without distorting retailers inventory decisions our theories are also consistent with trends in prices and availability following retailers adoption of revenue sharing contracts

forecasting marketing mix responsiveness for new products abstract before a new product launch marketers need to infer how demand will respond to various levels of marketing mix variables to set an appropriate marketing plan a critical challenge in estimating marketing mix responsiveness from historical data is that the observed decisions were affected by private information possessed by managers about the heterogeneous effects of marketing mix variables on sales the authors refer to this as the slope endogeneity problem such endogeneity differs from the intercept endogeneity problem which has been widely acknowledged in the literature to correct for the slope endogeneity bias the authors develop a conceptually simple control function approach that is amenable to multiple endogenous variables and marketing mix carryover effects the method is applied to forecasting advertising responsiveness in the u s dvd market the results suggest that advertising responsiveness varies substantially across dvd titles and that estimated marketing mix elasticities w

the critical trade off identity assignment and box office success in the feature film industry researchers have begun to study markets that are structured in terms of an opposition between market identities in a manner akin to the role pairs analyzed in structural role theory in this paper we analyze the feature film market which came to have such a role structure by the mid 1990s by exploiting the contingency that pertains to the identity of newly released films and the intermediary function played by critics we assess the tendency for offerings to be assigned one or the other of the available market identitiesc independent or major an analysis of the box office success of 396 feature films released in 1997 shows that a film attracted a larger audience when critics who specialized in major releases reviewed the film and implicitly certified it as fit for the mass market such classification was particularly crucial for breaking out of the initial constraints set by theatrical exhibitors however while attaining a major identity was necessary for success in the mass market it was a handicap in penetrating the art house this trade off illustrates how market structures restrict identity in a manner akin that by which role structures place constraints on the identities available to individuals copyright 2003 oxford university press

timing of effort and reward three sided moral hazard in a continuous time model this paper studies a three sided moral hazard problem with one agent exerting up front effort and two agents exerting ongoing effort in a continuous time model the agents efforts jointly affect the probability of survival and thus the expected cash flow of the project in the optimal contract the timing of payments reflects the timing of effort payments for up front effort precede payments for ongoing effort several patterns are possible for the cash allocation between the two agents with ongoing effort in one case where the two agents face equally severe moral hazard they share the cash flow equally at each point of time in another case where the two agents have different severities of moral hazard their payments are sequential in a more general case the two agents with ongoing effort first receive the cash flow alternately with an increasing frequency of switches and then divide the cash flow at each point of time this study provides a framework for understanding a broad set of business contracting issues the characteristics suggested in the optimal contract help us analyze the causes of business failure such as the recent debacle of mortgage backed securities

measuring the business stealing cannibalization and market expansion effects of entry in the u s motion picture exhibition market using a large and comprehensive theater level database covering over 18 billion in theater revenues over a five year period i document the extent and nature of business stealing revenue cannibalization and market expansion that occurred during the height of the 1990 s boom in movie theater construction

invited commentary making sense of these million dollar babies rationale behind superstar profit participation contracts the article by eliashberg et al 2006 provides a comprehensive review of current research on the motion picture industry with a special focus on managerially relevant issues on the supply side it walks the readers through the three distinct stages in the movie value chain of production distribution and theatrical exhibition and it points out promising avenues of future research the contractual issues between talents and the stu

bundling subscription tv channels abstract i analyze a market such as a subscription tv market where multiple varieties of an excludable public good are traded in bundles here bundling is not due to a producer s desire to extract consumers surplus but due to economies of scope in distribution technology the paper studies the pricing and production decisions of a supplier as well as the impacts of certain regulations such as pure bundling or pure components pricing restrictions findings of interest are as follows a profit constrained welfare maximizer would use a pure bundling price system when costs are low and a mixed bundling price system when costs are high a private monopolist produces too few varieties a pure bundling restriction on a private monopolist may increase welfare and consumer surplus but a pure components restriction never increases them

retailer entry conditions and wholesaler conduct the theatrical distribution of motion pictures abstract i add to the empirical literature on vertical contracting and wholesaler conduct by using retailer entry conditions to infer unobserved choice variables and equilibrium responses to prices and advertising after estimating the us demand for theatrical motion pictures from 1990 96 i apply these techniques to compare observed outcomes to predictions under various distributor conduct hypotheses while several caveats apply results indicate that the hypothesis of competition among distributors fails to describe advertising levels or aggregate payments of theaters to studios the hypothesis of some collusion among distributors however matches the data fairly well

optimal financial knowledge and wealth inequality we show that financial knowledge is a key determinant of wealth inequality in a stochastic life cycle model with endogenous financial knowledge accumulation where financial knowledge enables individuals to better allocate lifetime resources in a world of uncertainty and imperfect insurance moreover because of how the us social insurance system works better educated individuals have most to gain from investing in financial knowledge our parsimonious specification generates substantial wealth inequality relative to a one asset saving model and one in which returns on wealth depend on portfolio composition alone we estimate that 30 40 percent of retirement wealth inequality is accounted for by financial knowledge

using revenue sharing to implement flexible prices evidence from movie exhibition contracts movie exhibition contracts entail revenue sharing terms that go down with weeks since release we develop a simple model to show how the form of these contracts can be explained by the distributors desire to set flexible prices we then use detailed data on theater movie contracts in spain where we exploit the information available at the time of contracting for movies previously released in the u s and other movie and theater characteristics to show how the implications of our flexible pricing argument are supported in the data and differentiate our explanation from prior more standard risk sharing and moral hazard explanations

network or pay per view a welfare analysis the welfare effects of pay per view television and advertising supported networks are compared it is shown that pay per view television admits third degree price discrimination and may involve a large loss of consumer surplus

waterfall versus sprinkler product launch strategy influencing the herd a seller decides the price and sequence in which a product of unknown value is introduced to consumers consumers inspect the product before consumption and observe past prices and sales consumption at a high price is informative for later consumers as it indicates that the product is likely to be of high value i show that on an average prices decrease over time however expected revenue on an average rises over time for a high enough discount factor i find that for extreme beliefs the firm introduces the product to all consumers but for intermediate values the product is introduced only to one consumer

platform competition with must have components in platform component systems with indirect network effects some must have components are so popular with consumers that they create large discrete indirect network effects when they become available on a platform for example espn is a must have component of cable tv platforms this paper examines how platform market structures determine exclusive versus non exclusive contracts between platforms and components it shows that a component provider is more likely to sign exclusive contracts with a single platform if its popularity is high the platform market share difference is large and cross platform indirect network effects are low

on the effect of devaluation during stabilization programs in ldcs this paper is a cross section study of the effect of real devaluations on capacity utilization during stabilization programs in ldcs it finds that such devaluations had a significant negative effect on output as predicted in many recent papers this was not because devaluation caused a rise in aggregate saving but more because of a sharp contraction in investment external factors such as terms of trade and the capacity to import had a significant positive impact while monetary and fiscal policy played only a minor role copyright 1992 by mit press

what s an oscar worth this article examines the impact of an academy award nomination and award for best picture best actor actress and best supporting actor actress on a film s i market share of theaters ii average revenue per screen and iii its probability of survival the model is estimated using weekly box office data for a matched sample of nominated and non nominated films the results indicate substantial financial benefits for a nomination and award for best picture and best actor actress the structure of rewards is consistent with that found in two stage single elimination tournaments

bundling with customer self selection a simple approach to bundling low marginal cost goods with declining costs of distributing digital products comes renewed interest in strategies for pricing goods with low marginal costs in this paper we evaluate customized bundling a pricing strategy that gives consumers the right to choose up to a quantity m of goods drawn from a larger pool of n different goods for a fixed price we show that the complex mixed bundle problem can be reduced to the customized bundle problem under some commonly used assumptions we also show that for a monopoly seller of low marginal cost goods this strategy outperforms individual selling m 1 and pure bundling m n when goods have a positive marginal cost or when customers have heterogeneous preferences over goods comparative statics results also show that the optimal bundle size for customized bundling decreases in both heterogeneity of consumer preferences over different goods and marginal costs of production we further explore how the customized bundle solution is affected by factors such as the nature of distribution functions in which valuations are drawn the correlations of values across goods and the complementarity or substitutability among products altogether our results suggest that customized bundling has a number of advantages both in theory and practice over other bundling strategies in many relevant settings