AT THE MOVIES: THE ECONOMICS OF EXHIBITION CONTRACTS |
| |
| Authors: | Darren Filson David Switzer Portia Besocke |
| |
| Institution: | Filson:;Associate Professor of Economics, Department of Economics, Claremont Graduate University, 160 E. Tenth St., Claremont, CA 91711. Phone 1-909-621-8782, Fax 1-909-621-8460, Email Switzer:;Assistant Professor of Economics, Department of Economics, Northern Michigan University, 1401 Presque Isle Ave., Marquette, MI 49855. Phone 1-906-227-1696, Fax 1-906-227-2229, Email Besocke:;Ph.D. candidate, Department of Economics, Claremont Graduate University, 160 E. Tenth St., Claremont, CA 91711. Phone 1-909-621-8074, Fax 1-909-621-8460, Email |
| |
| Abstract: | We describe a real-world profit sharing contract—the movie exhibition contract—and consider alternative explanations for its use. Two explanations based on difficulties with forecasting fit the facts better than asymmetric information models. The first emphasizes two-sided risk aversion; the second emphasizes measurement costs. Transaction costs and long-term relationships also affect contractual practices. We use an original data set of all exhibition contracts involving 13 theaters owned by a prominent St. Louis exhibitor over a two-year period to inform our theories and test hypotheses. The findings question traditional contract theory and may be relevant for other contracting environments.(JEL L14 , L82 , D45 , D80 ) |
| |
| Keywords: | |
|
|
