The Strategic Effects of Vertical Market Structure: Common Agency and Divisionalization in the US Motion Picture Industry

I examine the release-date scheduling of all motion pictures that went into wide release in the US in 1995 and 1996 to investigate the effects of vertical market structure on competition. The evidence suggests that complex vertical structures involving multiple upstream or downstream firms generally do not achieve efficient outcomes in movie scheduling. In addition, analysis of the data suggests that the production divisions of the major studios act as integrated parts of the studio, rather than as independent competing firms.