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Spatial Competition and Demand: An Application to Motion Pictures

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  • Darlene C. Chisholm
  • George Norman

Abstract

This paper provides a rich assessment of the demand characteristics for movie theatre attendance in two major metropolitan markets and provides strong support for the importance of spatial characteristics in empirical demand analysis. We provide evidence of the usual competitive effect of location on an exhibitor’s demand but also find evidence of a clustering effect: when a group of theatres is in close proximity to each other, their proximity generates additional demand for all theatres within the cluster. The demographic evidence suggests that movie attendance is a normal good but does not support the commonly held industry view that young male viewers drive demand. Finally, we show that attendance at a particular theatre is affected by both the theatre’s attributes and the attributes of nearby competing theatres. The attributes we include cover physical features and theatre type.

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Paper provided by Department of Economics, Tufts University in its series Discussion Papers Series, Department of Economics, Tufts University with number 0216.

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Date of creation: 2002
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Handle: RePEc:tuf:tuftec:0216

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  13. Peter Davis, 2006. "Spatial competition in retail markets: movie theaters," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 964-982, December.
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  16. Dan Bernhardt & Eric Hughson & Edward Kutsoati, 2002. "Survival of the Unfittest: How Dodos Become Managers," Discussion Papers Series, Department of Economics, Tufts University 0212, Department of Economics, Tufts University.
  17. Darlene Chisholm & George Norman, 2002. "Heterogeneous Preferences and Location Choice with Multi-Product Firms," Discussion Papers Series, Department of Economics, Tufts University 0205, Department of Economics, Tufts University.
  18. Simon P. Anderson & Andre de Palma & Jacques-Francois Thisse, 1987. "Demand for Differentiated Products," Discussion Papers 726, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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  21. Chisholm, Darlene C, 1997. "Profit-Sharing versus Fixed-Payment Contracts: Evidence from the Motion Pictures Industry," Journal of Law, Economics and Organization, Oxford University Press, vol. 13(1), pages 169-201, April.
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Cited by:
  1. Darlene Chisholm & George Norman, 2002. "Heterogeneous Preferences and Location Choice with Multi-Product Firms," Discussion Papers Series, Department of Economics, Tufts University 0205, Department of Economics, Tufts University.
  2. Ricard Gil & Wesley Hartmann, 2007. "The Role and Determinants of Concession Sales in Movie Theaters: Evidence from the Spanish Exhibition Industry," Review of Industrial Organization, Springer, vol. 30(4), pages 325-347, June.
  3. Alan Collins & Chris Hand, 2005. "Analyzing moviegoing demand: an individual-level cross-sectional approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(5), pages 319-330.

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