Screening decisions of vertically integrated theaters in the Korean movie industry

• Published in: Economics letters Vol. 170; pp. 6 - 9
• Main Authors: Chung, Hoe Sang, Kim, Min, Yi, Gihwan
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01.09.2018; Elsevier Science Ltd
• Subjects: Decision making; Incentive misalignment; Korean movie industry; Market analysis; Market foreclosure; Motion picture criticism; Motion picture industry; Motion pictures; Number of movie showings; Theater; Vertical integration; Korean Peninsula; Market foreclosure; Korean movie industry; L82; Number of movie showings; Incentive misalignment; L42; L22; Vertical integration
• ISSN: 0165-1765; 1873-7374
• DOI: 10.1016/j.econlet.2018.05.026

This paper investigates the effects of vertical integration on screening decisions using data from the Korean movie industry. We find that integrated theaters show their affiliated movies more than nonaffiliated movies, and more than nonintegrated theaters do. However, this gap reduces during the peak times of the day and after the opening week. Our evidence suggests that the integrated theaters’ screening decisions favorable to their own movies are better understood as the result of dealing with the incentive misalignment than as the result of foreclosing other movies. •We examine the effects of vertical integration on screening decisions in the Korean movie industry.•We find that integrated theaters show their affiliated movies more than nonaffiliated movies.•However, this gap reduces during the peak times of the day and after the opening week.•Our evidence suggests that the integrated theaters’ screening decisions are consistent with treating the incentive misalignment.