Searching for the Concentration-Price Effect in the German Movie Theater Industry

Abstract

This paper investigates whether a price-concentration relationship can be found on local cinema markets in Germany. First, we test a model of monopolistic pricing using a new set of German micro data and find no significant difference in admission prices on monopoly and oligopoly markets. In a next step, we test whether this can be explained by the existence of local monopolies, but find no hint of that. Implicit or explicit collusion among cinema operators might explain our observations. JEL Classifications: L11, L82, R32

Pricing of First-Run Movies in Small U.S. Metropolitan Areas: Multimarket Contact and Chain Effects

“…9 Davis (2005) found a significant but small impact of local market structure on movie prices in a study of large U.S. markets in the mid-1990s. Bohme and Muller (2011) found no significant difference in movie theater pricing between monopoly and oligopoly markets in Germany. 10 While this price-reducing impact of MMC for larger markets may simply be an artifact of our econometric specification (and in future work, one might restrict effects to be non-negative), there has been some work (one recent example is Arie, Markovich, and Varela (2014)) suggesting that -in some cases -MMC can allow cost efficiencies across markets.…”

The economics of movies (revisited): A survey of recent literature

“…Entry and exit decisions, as well as competition between city, suburban, and regional cinemas, have also provided research topics in both historical and contemporary contexts (Collins et al., 2009b; Gil & Marion, 2018; Orhun et al., 2016; Sedgwick et al., 2014; Takahashi, 2015). At the cinema level, applied and theoretical research examines the profit implications from common uniform ticket pricing practices of the industry (Chen, 2009; Choi et al., 2015; Courty & Nasiry, 2018; De Roos & McKenzie, 2014; Ho et al., 2018), as well as the relationships between geographic concentration of cinemas and ticket prices (Bohme & Muller, 2011). Willingness‐to‐pay for movie tickets is investigated in relation to concession sales by Gil and Hartman (2009), while willingness‐to‐pay for specific service features of cinemas (such as VIP class, etc.)…”