Spatial Competition and Demand: An Application to Motion Pictures

This paper provides a rich assessment of the demand characteristics for movie theatre attendance in two major metropolitan markets and provides strong support for the importance of spatial characteristics in empirical demand analysis. We provide evidence of the usual competitive effect of location on an exhibitor’s demand but also find evidence of a clustering effect: when a group of theatres is in close proximity to each other, their proximity generates additional demand for all theatres within the cluster. The demographic evidence suggests that movie attendance is a normal good but does not support the commonly held industry view that young male viewers drive demand. Finally, we show that attendance at a particular theatre is affected by both the theatre’s attributes and the attributes of nearby competing theatres. The attributes we include cover physical features and theatre type.

Product Differentiation and Film Programming Choice: Do First-Run Movie Theatres Show the Same Films?

We present an empirical analysis of product differentiation using a rich new dynamic panel data set on film programming choice in a major U.S. metropolitan motion-pictures exhibition market. These data allow us to investigate the determinants of strategic product differentiation in a multicharacteristics space. We find evidence of stability in the degree of product differentiation over time, but also find that the degree of product differentiation between theatre pairs reflects a balance between strategic concerns and contractual constraints. Similarity in one dimension is offset by differentiation in others. Finally, we find that theatres under common ownership make more similar programming choices than theatres with different owners.

Asset Specificity and Long-Term Contracts: The Case of the Motion-Pictures Industry

The proliferation of long-term contractual arrangements between actors and studios in the U.S. motion-pictures industry during the Age of the Studio (1929-48) is analyzed. Asset specificity and transaction-cost minimization explain the optimality of long-term over short-term agreements. In particular, the following historical factors prove to have been pivotal in increasing the degree of relationship-specific investment and decreasing the costs of transacting: the high degree of both industrial concentration and vertical integration; the prevalence of a star-promotion system; the U.S. v. Paramount antitrust litigation; and the rise of television as a substitute form of entertainment.Contracts; Motion Picture; Transactions

When to Exit a Product: Evidence from the U.S. Motion-Pictures Exhibition Market

Business for funding this research and to Synergy Retail for compiling the dataset used in this paper. We are grateful to Oleg Moskatov for his careful research assistance, and to Jonathan Haughton, Sanjiv Jaggia, Mikhail Klimenko, and seminar and session participants at Northeastern University, Suffolk University, and the International Industrial Organization Society Conference for helpful comments and suggestions. When to Exit a Product: Evidence from the U.S. Motion-Pictures Exhibition Market When is it optimal for a multi-product firm to exit a product? We analyze strategic product exit using data on motion-pictures exhibition choices in a major metropolitan first-run market to estimate the survivor function for films at a given theatre. This analysis indicates that a film’s survival at a particular theatre is affected by intra-firm relative performance and inter-firm competitive pressures. We find that theatres within chains avoid business stealing. Preliminary analysis further suggests that theatres compete for market share with neighboring theatres by increasing the time to exit when the competing theatre is owned by a different chain. I. Strategic Aspects of Product Re-Design The characteristics of a theatre consist of its physical attributes, which are relativel