ABSTRACT
Block booking is the selling of motion pictures as a group, or “block.” On two occasions the US Supreme Court ruled it illegal: United States v. Paramount Pictures, Inc. and United States v. Loew’s, Inc.2 Scholars have debated why movie producers booked films in blocks. The producers claimed that it merely allowed them to economically provide in quantity a product needed in quantity.3 The Supreme Court disagreed, and banned the practice on the grounds that it was used to force exhibitors to purchase films they did not want in return for receiving those they did. Stigler4
pointed out the illogic nature of the Supreme Court’s argument, and proposed that block booking was a form of price discrimination, akin to other tying arrangements. Kenney and Klein5 rejected Stigler’s explanation, and suggested instead that block booking was intended to resolve an oversearching problem, brought about by the fact that new information about film quality (in the form of early box office receipts) was revealed between the signing of the contract and the time when the exhibitor actually received and had to pay for the film. The Kenney and Klein explanation remains the most generally accepted among economists today.
