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Motion picture production incentives and filming location decisions: a discrete choice approach
[Synthetic control methods for comparative case studies: estimating the effect of California’s Tobacco Control Program]

Author

Listed:
  • Mark F Owens
  • Adam D Rennhoff

Abstract

We use a discrete choice model to study the impact of tax incentives on firm location choices in situations involving heterogeneous geographic characteristics, heterogeneous firm preferences and large choice sets. We apply our model to investigate the impact of movie production incentives on filming location choices for movies produced from 1999 to 2013. We gather the characteristics of filming locations and use a machine-learning technique to define choice sets. We find production incentives can attract movies to a state, but the impact depends on the type of incentive offered, studio characteristics and inherent location geographic characteristics. Mid-sized studios respond to all forms of incentives, major studios respond only to refundable and transferable tax credits, and independent studios are not sensitive to any incentives. We fail to find strong evidence that incentives create a more permanent movie industry in a state. A counterfactual identifies the states most impacted by these policies. We supplement our discrete choice model with a simple cost-benefit analysis, which indicates that movie incentive programs are revenue-negative for states.

Suggested Citation

  • Mark F Owens & Adam D Rennhoff, 2020. "Motion picture production incentives and filming location decisions: a discrete choice approach [Synthetic control methods for comparative case studies: estimating the effect of California’s Tobacc," Journal of Economic Geography, Oxford University Press, vol. 20(3), pages 679-709.
  • Handle: RePEc:oup:jecgeo:v:20:y:2020:i:3:p:679-709.
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    File URL: http://hdl.handle.net/10.1093/jeg/lby054
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    Citations

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    Cited by:

    1. Rickman, Dan S. & Wang, Hongbo, 2022. "Industry Aggregation and Assessment of State Economic Development from Motion Picture and Television Production Incentives," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 52(1), August.
    2. Rickman, Dan & Wang, Hongbo, 2020. "Lights, Camera, What Action? The Nascent Literature on the Economics of US State Film Incentives," MPRA Paper 104477, University Library of Munich, Germany.
    3. Rickman, Dan & Wang, Hongbo, 2020. "Assessing State Economic Development from Motion Picture and Television Production Incentives: Standardizing the Industry for Analysis," MPRA Paper 104052, University Library of Munich, Germany.
    4. Dan S. Rickman & Hongbo Wang, 2023. "Creating and maintaining film clusters: Synthetic control method analysis of the enactment and repeal of US state film incentives," Papers in Regional Science, Wiley Blackwell, vol. 102(2), pages 363-392, April.

    More about this item

    Keywords

    Motion pictures; tax incentives; geographic variation; discrete choice models; machine learning;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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