Motion Pictures Industry: Economies of Scale and Trade

Abstract

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,

Economics of motion pictures: the state of the art

“…The larger effective markets for the larger countries permit firms in these countries to benefit from scale economies in the production of media products. Hoskins and Mirus (1988), Hoskins and McFayden (1991), Marvasti (1994Marvasti ( , 2000, Marvasti and Canterbery (2005), Waterman (1988), and Wildman and Siwek (1988), among others, provide thorough explorations of this type of model in relation to both film and television markets. In the context of the motion-picture market, this model appears to be an accurate depiction in the pre-1990s period when non-US theatrical revenues were smaller than domestic revenues.…”

Human capital, pay structure, and the use of performance measures in bonus compensation

“…The first two ratios measure labor intensity and are calculated as (1) 1997 labor costs divided by 1997 depreciation expense and (2) 1997 labor costs divided by 1997 property, plant, and equipment. These ratios follow Marvasti (2000) who uses the capital-labor ratio to capture the extent to which the movie industry is capital intensive, Graham (2000) who analytically motivates a proxy that captures the degree of capital intensity and then uses the proxy empirically to study productivity in manufacturing firms, and Ballester et al (1999) who uses both labor and capital intensity measures to study restructuring of firms. The use of labor intensity to proxy for human capital is in accordance with the earlier definition that human capital is representative of the firm's workforce.…”

Research on the Motion Picture Industry: State of the Art and New Directions Off the Beaten Track Away From Theatrical Release

“…Economies of scale exist due to the dominance of global over bilateral fixed costs of exporting (Hansen and Xiang, ). Imperfect competition caused by differentiated products and vertical integration of production and distribution can be proven alike (Marvasti, ; Canterbery and Marvasti, ). Moreover, Hanson and Xiang () construe transport costs as resulting from cultural dependency of media goods rather than physical transport costs, which are marginal in the film industry.…”