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Induce efficiency improvements. However, it is also important to study vertical contracts empirically in order to gain insight into the relative size of different types of efficiency gains. In this paper, I empirically analyze a contractual innovation in the vertically-separated video rental industry. Prior to 1998, video stores obtained inventory from movie distributors using simple linear pricing contracts. In 1998, revenue-sharing contracts were widely adopted. I investigate the effect of the.
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