Through the Looking Glass: Runaway Production and 'Hollywood Economics'

Abstract

This paper uses the issue of runaway production as a looking glass into the complex world of Hollywood economics and politics. As such, a broad overview of Hollywood's business practices, history, and technology are discussed so the reader can understand how runaway production (a major issue itself) is one piece of the Hollywood puzzle. Specifically, this paper attempts to study runaway productions from the Law and Economics approach described in Judge Richard Posner's text on the subject. Events in 2006 illustrate the continuing importance of runaway productions and CEIDR's August 2006 report is discussed in this paper.

Recently expanded, this updated version has new statistics on free trade issues and a discussion on how many jobs are directly and indirectly involved in the motion picture industry.

This paper only examines runaway production of theatrical movie productions; runaway production as it pertains to television shows, mini-series, movies of the week and commercials is not discussed. Since runaway production is a hot button issue in Hollywood (and around the world), it serves as an excellent starting point for a newcomer to the movie industry or a future entertainment attorney seeking to understand the policy issues runaway production presents and how local, state and national governments have responded.

Keywords: Hollywood, runaway production, economics, Richard Posner, outsourcing, unions, motion picture industry, movies, offshoring, labor, inequality

JEL Classification: A12, A13, A14, B40, D11, D12, D21, D23, D31, D40