|Title:||Motion Pictures Industry:Economies of Scale and Trade|
|Citation:||Marvasti, A. (2000). Motion pictures industry: Economies of scale and trade. International Journal of the Economics of Business, 7(1), 99-114.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|About the Data|
|Data Description:||Exports and imports data for SITC 883 (motion pictures) is from the UN
Commodity Trade Statistics, 1961-1988, to calculate the Measure of Intra-Industry Trade (MIIT) and net export. Population data is from the Census Bureau. US GNP figures are from the International Financial Statistics Yearbook, 1987 published by IMF and National Accounts, 1989, published by OECD. The International Financial Statistics Yearbooks of IMF also were the sources of data for the foreign exchange rate. The US tariff data is from various editions of the US International Trade Commission-Tariff Schedule of the United States. Producer price index and CPI data are from the US Department of Labor, Bureau of Labor Statistics. US total consumer expenditures are from Business Statistics, Bureau of Economic Analysis, US Department of Commerce, June 1992.
Finally, data for the star variable was collected through a questionnaire. First, a questionnaire was prepared with the names of all stars who appeared in blockbuster movies between 1965 and 1988. This list included some 500 names. After an initial screening by individuals of various ages, the names that received at least 2 out of 3 votes were kept. The new questionnaire included approximately 250 names and was given to 170 people. Based
|Data Type:||Primary and Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
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.
Main Results of the Study
Estimates of the net export and intra-industry trade measure equations support the factor endowment theory of trade. However, the industry appears to be labor-rather than capital-intensive. Furthermore, the effect of the degree of concentration in the industry is inconclusive. External economies of scale for trade in motion pictures receives some support consistent with the findings by Marvasti (1994). It also appears that the alleviation of the US tariffs on the imports of motion pictures in the last three decades has contributed to the narrowing gap between exports and imports in the industry. Surprisingly, while the `blockbuster’ is a significant contributor to domestic production in the US motion pictures industry, it does not seem to be a significant determinant of trade in the industry.
The large size of the domestic market appears to be important for supporting expensive stars and blockbusters as well as an excess supply of films for the global market. Yet, stars and blockbusters in the domestic market do not seem to have a positive effect on the US exports of motion pictures, possibly because of differing taste driven by cultural differences. It must be noted, however, that changes in the foreign direct investment in the industry may have influenced the results and possibly distorted our judgement with regard to the determinants of trade in motion pictures industry.
Policy Implications as Stated By Author
Coverage of Study
|Level of aggregation:||Individual Star|
|Period of material under study:||1965-1988|