Blockbusters and market expansion: evidence from the motion picture industry |
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Authors: | Jordi McKenzie Vladimir Smirnov |
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Institution: | 1.Department of Economics,Macquarie University,Sydney,Australia;2.School of Economics,University of Sydney,Sydney,Australia |
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Abstract: | Like other cultural industries, the theatrical film industry is subject to the ‘blockbuster effect’, where popular products often dominate their competition by orders of magnitude over relatively short-run time horizons. This paper investigates this particular feature of the industry and the implication for overall market size. Using simple regression analysis, a positive relationship between (product-level) market concentration and market size is established using weekly box office revenue data from the US motion picture industry. This empirical evidence supports a simple theoretical model of heterogeneous consumers who selectively participate in the market. |
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