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When to Exit a Product: Evidence from the U. S. Motion-Picture Exhibition Market

  • Darlene C. Chisholm
  • George Norman

When is it optimal for a multi-product firm to exit a product? We analyze strategic product exit using data on motion-pictures exhibition choices in a major metropolitan first-run market to estimate the survivor function for films at a given theatre. This analysis indicates that a film’s survival at a particular theatre is affected by intra-firm relative performance and interfirm competitive pressures. We find that theatres within chains avoid business stealing. Preliminary analysis further suggests that theatres compete for market share with neighboring theatres by increasing the time to exit when the competing theatre is owned by a different chain.

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 96 (2006)
Issue (Month): 2 (May)
Pages: 57-61

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Handle: RePEc:aea:aecrev:v:96:y:2006:i:2:p:57-61
Note: DOI: 10.1257/000282806777212440
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