The global success of the American film industry facing rising costs of production, foreign protectionism, and liberal trade policies at home is an enigma. The basis for American dominance is found in market size and structure. In turn, market characteristics and microdata explain protectionist strategies—leading to a complex gravity‐iceberg model of U.S. exports. Besides purchasing power and spatial distance, cultural variables as well as protectionist strategies are important influences on U.S. motion pictures trade. Competitors nonetheless fail to match the magical American combination of movie stars, economies of scale, and popularity of English speech.
Recent economic theories find industrial structure to be an important determinant of the pattern of trade. In the motion picture industry, economies of scale and imperfect competition, in addition to cultural sovereignty, are conditions sometimes used to justify protectionist policies. This paper examines the significance of the capital-labor ratio, VCRs, market share, tariffs, domestic market size, taste similarities, stars and domestically popular films on international trade in the industry. The results indicate that stars and blockbusters in the domestic market do not seem to influence consumption of films overseas, however, external economies of scale are present in the industry, tariffs are effective trade barriers in the industry, and VCRs increase the chances of piracy.Us Motion Picture Trade, Imperfect Competition, Industry Structure, Economies Of Scale,
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