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The decline and fall of the European film industry: sunk costs, market size and market structure, 1890-1927

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  • Bakker, Gerben

Abstract

In the 1900s, the European film industry exported throughout the world, at times supplying half the US market. By 1920, however, European films had virtually disappeared from America, and had become marginal in Europe. Theory on sunk costs and market structure suggests that an escalation of sunk costs during a rapid US growth phase resulted in increased concentration; eight surviving companies dominated international film production and distribution forever after. European film companies, although overall profitable, could not take part, and after the war could not catch up. US, British and French time series data for 1890-1930 support the theory.

Suggested Citation

  • Bakker, Gerben, 2003. "The decline and fall of the European film industry: sunk costs, market size and market structure, 1890-1927," Economic History Working Papers 22366, London School of Economics and Political Science, Department of Economic History.
  • Handle: RePEc:ehl:wpaper:22366
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    File URL: http://eprints.lse.ac.uk/22366/
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    References listed on IDEAS

    as
    1. Bakker, Gerben, 2001. "Stars and Stories: How Films Became Branded Products," Enterprise & Society, Cambridge University Press, vol. 2(03), pages 461-502, September.
    2. Gerben Bakker, 2003. "Building Knowledge about the Consumer: The Emergence of Market Research in the Motion Picture Industry," Business History, Taylor & Francis Journals, vol. 45(1), pages 101-127.
    3. John Sutton, 1997. "One Smart Agent," RAND Journal of Economics, The RAND Corporation, vol. 28(4), pages 605-628, Winter.
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    Cited by:

    1. Klaus Rennings & Peter Markewitz & Stefan Vögele, 2013. "How clean is clean? Incremental versus radical technological change in coal-fired power plants," Journal of Evolutionary Economics, Springer, vol. 23(2), pages 331-355, April.
    2. Bakker, Gerben, 2012. "Adopting the rights-based model: music multinationals and local music industries since 1945," Economic History Working Papers 47507, London School of Economics and Political Science, Department of Economic History.
    3. Bakker, Gerben, 2004. "At the origins of increased productivity growth in services. Productivity, social savings and the consumer surplus of the film industry, 1900-1938," Economic History Working Papers 22348, London School of Economics and Political Science, Department of Economic History.
    4. Federico Etro, 2017. "The Economics of Renaissance Art," Working Papers 2017:13, Department of Economics, University of Venice "Ca' Foscari".
    5. Bakker, Gerben, 2014. "How they made news pay: news traders’ quest for crisis-resistant business models," Economic History Working Papers 59304, London School of Economics and Political Science, Department of Economic History.
    6. Bakker, Gerben, 2007. "The evolution of entertainment consumption and the emergence of cinema, 1890-1940," Economic History Working Papers 22316, London School of Economics and Political Science, Department of Economic History.
    7. Bakker, Gerben, 2007. "Structural change and the growth contribution of services: how motion pictures industrialized US spectator entertainment," Economic History Working Papers 22314, London School of Economics and Political Science, Department of Economic History.
    8. Bakker, Gerben, 2012. "Sunk costs and the dynamics of creative industries," Economic History Working Papers 49081, London School of Economics and Political Science, Department of Economic History.

    More about this item

    JEL classification:

    • N0 - Economic History - - General
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • B1 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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