Vertical Integration in the Japanese Movie Industry
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This study examines vertical integration in the Japanese movie industry. I estimate an admission price equation, and a moviegoing demand equation derived from a discrete choice model of product differentiation. In order to overcome identification problems, this study exploits a panel structure dataset. My results show that the price of vertically integrated theaters tends to be higher than nonintegrated theaters, but it appears to be due to the inherent high quality of vertically integrated theaters. On the other hand, vertically integrated theaters are more popular among consumers and have higher attendance than nonintegrated theaters. Even after controlling the theater fixed effects, attendance for vertically integrated theaters is still larger than nonintegrated theaters. That is, the integration of producers/distributors and theaters is likely to be a source of economic efficiency. Policy implications are also proposed.
Keywordsvertical integration movie theater discrete choice model competition policy
JEL ClassificationL42 L22 L82
I would like to express sincere gratitude to the editor (Michael Peneder) and an anonymous referee. I am also thankful to attendees at seminars at the Competition Policy Research Center (CPRC), Aoyama Gakuin, the Japan Economic Association annual meetings, and the Canadian Law and Economics Association meetings, for their valuable comments and suggestions. This is an outgrowth of research projects at the CPRC. I would like to thank the Ministry of Economy, Trade and Industry and the Ministry of Internal Affairs and Communications for allowing me to use the data used in this study. The views expressed in this paper are mine, and do not reflect the views of the CPRC, the Japan Fair Trade Commission, or any individual commissioner. Needless to say, all remaining errors are mine.
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