Antitrust and Pricing in the Motion Picture Industry
Abstract
Few industries have experienced the same degree of antitrust scrutiny and litigation as the motion picture industry. Nevertheless, the pricing structure of movie tickets has never been a product of free market forces. Since the early 1970s, ticket pricing has been particularly puzzling: At any given theater, admission fees are uniform across movies and over time. This Article studies the history of the industry’s pricing systems in their legal, economic, and technological contexts. It shows that, despite intensive antitrust scrutiny and litigation, forces with considerable market power have always shaped the industry’s pricing systems. The Article studies the present pricing regime and explores the economic justifications for uniform pricing, concluding that none of the justifications is sound. The Article argues that vertical restraints, which are illegal under present antitrust laws, have at least some impact on the persistence of the present pricing regime. It further argues that the current prohibition against distributors’ intervention in ticket pricing is undesirable and that, given the idiosyncratic characteristics of the industry, a coordinated transition to a variable pricing could be desirable.