Why is it that movie ticket prices do not vary between films that

cost vastly different amounts to make? It is because the current model

for the production, distribution, and theatrical exhibition of feature

films is deeply flawed. Despite long-awaited federal action designed to

curb anticompetitive behavior, film distributors have continued to exert

inappropriate control over pricing at the box office. The result is an

insufficiently competitive-and hence inefficient-market for theatrical

exhibition. Previous scholarship has discussed some of the root causes

of this behavior and has called for ticket price differentiation based

upon the context of a screening (such as the time of day, the day of the

week, the season, or the seating). Some scholars have also suggested

pricing based on film genre. Unfortunately, these proposed solutions

fall short of the mark, and there has been a glaring absence of discussion

or scholarship about the market problems resulting from a lack of

price differentiation between individualfilms. This article analyzes anticompetitive

behavior in film exhibition, focuses on the resulting market

inefficiencies that ultimately harm the consumer, and calls for a

pricing system primarily influenced byfilm-specific costs.

We consider a dynamic control problem associated with a generalized Brownian network, the objective being to minimize expected discounted cost over an infinite planning horizon. In this Brownian control problem (BCP), both the system manager's control and the associated cumulative cost process may be locally of unbounded variation. Due to this aspect of the cost process, both the precise statement of the problem and its analysis involve delicate technical issues. We show that the BCP is equivalent, in a certain sense, to a reduced Brownian control problem (RBCP) of lower dimension. The RBCP is a singular stochastic control problem, in which both the controls and the cumulative cost process are locally of bounded variation.