This is perhaps the most readable book on the founding of Hollywood. http://www.amazon.com/Empire-Their-Own-Invented-Hollywood/dp...

As the subtitle indicates, it has a particular focus on the early Jewish players in the movie business, but it covers all aspects along the way.

As for the decimation of the European industry, that really happened more in WWII than WWI. There's a good documentary mini-series on the early days of the Euro-industry, which ends with the WWII decline.

http://www.amazon.com/Cinema-Europe-Hollywood-Kenneth-Branag...

Apparently out of print now, but worth watching if you can find it.

Thanks to your question, I did some googling and found this article, titled "La-la land: the origins" : http://www.nytimes.com/2005/08/21/weekinreview/21basics.html

He write, "Los Angeles's distance from New York was also comforting to independent film producers, making it easier for them to avoid being harassed or sued by the Motion Picture Patents Company, a k a the Trust, which Thomas Edison helped create in 1909. The Trust, which included the dominant producers, distributor and film stock manufacturer, was intended to monopolize the entire industry. "