(Answered)-Assume a distributor of two films, "The Revenant" and "Daddy's - (2025 Updated Original AI-Free Solution

Question

Assume a distributor of two films, "The Revenant" and "Daddy?s Home" is faced with the following demand for these films from two first-run movie houses, AMC and Regal Theatres that serve the same market.

Maximum Prices ($'000) paid by

For: Regal Theatres AMC Theatres

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The Revenant 12 18

Daddy?s Home 25 10

What is the best pricing strategy for the distributor to adopt if we assume it cannot explicitly discriminate in price or use tying contracts (force a theatre to buy both movies)? Remember that first-run movies are a perishable item.