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Learning via sequential market entry: Evidence from international releases of U.S. movies

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  • Holloway, Isaac R.

Abstract

Most U.S. movies are not distributed simultaneously to all of their foreign markets and many do not recoup the costs of market entry. In theory, sequential entry allows distributors to learn about their movies' quality from performance in successive markets. I find empirical evidence consistent with recent trade models of learning about export profitability: a one-standard-deviation increase in the update to expected box-office revenues from the previous round is associated with an increase in the probability of entry to a given market of approximately 20%. This effect is robust to controls for other potential determinants of entry, including extended gravity, seasonality of demand, academy award nominations, and competition from local and imported pictures.

Suggested Citation

  • Holloway, Isaac R., 2017. "Learning via sequential market entry: Evidence from international releases of U.S. movies," Journal of International Economics, Elsevier, vol. 104(C), pages 104-121.
  • Handle: RePEc:eee:inecon:v:104:y:2017:i:c:p:104-121 DOI: 10.1016/j.jinteco.2016.10.008
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    References listed on IDEAS

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    1. Isaac Holloway, 2014. "Foreign entry, quality, and cultural distance: product-level evidence from US movie exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 371-392, May.
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    Keywords

    Heterogeneous quality; Sequential entry; Motion pictures; Cultural trade;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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