earticle

영어

Vertical integration is a persistent structural phenomenon in the Korean film industry. Generally, vertical integration can incur both positive and negative effects. Its positive effect which occurs in the individual firm is gains in efficiency in resource management through internalization while the negative effect which occurs in industry level is a distortion of resources management by discriminating the non-affiliates. This paper analyzes the behaviors of two major film companies that achieved vertical integration from investment, production, distribution to screening. This paper is differentiated from the pervious literature by analyzing the discriminating behaviors of the major film firms in allocations of seats and time of screening to films of the non-affiliates. This paper shows that the major film companies treated its affiliates unfairly by allocating more number of seats in golden time to the films distributed by them. Even though the major firms treat its affiliates, its discrimination did not show good box-office performance. Therefore, in the Korean film industry, the vertical integration plays a kind of barriers for the non-affiliates to enter the film market. That leads to loss in efficiency of the Korea film industry.