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Blockbusters and market expansion: evidence from the motion picture industry

Author

Listed:
  • Jordi McKenzie

    (Macquarie University)

  • Vladimir Smirnov

    (University of Sydney)

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.

Suggested Citation

  • Jordi McKenzie & Vladimir Smirnov, 2018. "Blockbusters and market expansion: evidence from the motion picture industry," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(2), pages 341-352, May.
    • Handle: RePEc:kap:jculte:v:42:y:2018:i:2:d:10.1007_s10824-017-9308-y
    DOI: 10.1007/s10824-017-9308-y
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    References listed on IDEAS

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    Cited by:

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    2. Smirnov, Vladimir & Wait, Andrew, 2021. "Preemption with a second-mover advantage," Games and Economic Behavior, Elsevier, vol. 129(C), pages 294-309.

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    More about this item

    Keywords

    Blockbusters; Market expansion; Motion pictures;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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