Abstract

http://ssrn.com/abstract=1960171
 
 

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Does Vertical Integration Decrease Prices? Evidence from Paramount Antitrust Case of 1948


Ricard Gil


Johns Hopkins University - Carey Business School

November 15, 2011


Abstract:     
I empirically examine the impact of the 1948 Paramount antitrust case on ticket prices using a unique data set collected from Variety magazine issues between 1945 and 1955. With weekly movie theater information on prices, revenues and theater ownership for an unbalanced panel of 393 theaters located in 26 different metropolitan areas, I find evidence consistent with Spengler’s (1950) prediction that vertical integration lowers prices through the elimination of double-marginalization. My results show that vertically integrated theaters charged lower prices and sold more admission tickets than nonvertically integrated theaters. I also find that the rate at which prices increased in theaters were slower before vertical separation than it was after separation. A back of the envelope calculation suggests that losses in consumer surplus due to the Supreme Court resolution and the corresponding sale of theater holdings by Paramount and seven other companies were sizable.

Number of Pages in PDF File: 53

Keywords: vertical integration, prices, antitrust, movies

JEL Classification: L22, L42, L82

working papers series





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Date posted: November 16, 2011 ; Last revised: July 30, 2012

Suggested Citation

Gil, Ricard, Does Vertical Integration Decrease Prices? Evidence from Paramount Antitrust Case of 1948 (November 15, 2011). Available at SSRN: http://ssrn.com/abstract=1960171 or http://dx.doi.org/10.2139/ssrn.1960171

Contact Information

Ricard Gil (Contact Author)
Johns Hopkins University - Carey Business School ( email )
100 International Drive
Baltimore, MD 21202
United States
HOME PAGE: http://carey.jhu.edu
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