This chapter is an overview of a new kind of economics of the movies; it also is my attempt to lay a new foundation of the economics of art and culture. The essence of cultural goods is that they are creative goods that have no natural limit on their consumption or dissemination; they are information goods. And they are wildly uncertain. I show how this vision may be implemented in a rigorous and insightful way in the study of the movies. A centerpiece of the analysis is the stable Paretian hypothesis and its usefulness as a model of motion picture revenues, costs, and returns. The industry's organization, contracts, pricing, and compensation deals are also seen as rational adaptations to the uncertainty captured by the stable Paretian probability model. The essence of the stable Paretian model is that the probabilities of motion picture outcomes are far from Normal. The tails of the stable Paretian distribution are "heavy" and large-scale events are far more probable in a Paretian than in a Gaussian world. The large events far out on the probability tails dominate sample statistics. The variance is infinite and, for some variables, even the mean does not exist. Movie box office revenues, therefore, have no natural size or scale and there is no typical or average movie; each is unique unto itself. Revenue and cost dynamics are complex and expectations of cost or revenue at level X are proportional to X.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
|This chapter was published in: ||This item is provided by Elsevier in its series Handbook of the Economics of Art and Culture with number
1-19.||Handle:|| RePEc:eee:artchp:1-19||Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/bookseriesdescription.cws_home/BS_HE/description|
When requesting a correction, please mention this item's handle: RePEc:eee:artchp:1-19. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.