2013-15 Price effects of multimarket contact among movie chains in small U.S. metropolitan areas

Movie theater chains are ubiquitous in major metropolitan areas of the U.S., with generally two or more of these large chains present. However in smaller metropolitan areas, we see far more variation in the role of these chains. This allows for an opportunity to see whether multimarket contact (MMC) among these firms has an impact on movie pricing in these smaller markets. In this paper, data on movie pricing, market structure, and income and population characteristics are obtained for 79 small metropolitan areas – those with under 250,000 people – which are not part of larger “consolidated” metropolitan areas. A crude measure of MMC is found to indeed be related to price increases in the smallest of these markets.