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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: https://researchonline.lse.ac.uk/id/eprint/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(3), 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.
    4. Perkins,Edwin J., 1999. "Wall Street to Main Street," Cambridge Books, Cambridge University Press, number 9780521630290, January.
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    Cited by:

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    2. John Sedgwick & Michael Pokorny, 2005. "The film business in the United States and Britain during the 1930s," Economic History Review, Economic History Society, vol. 58(1), pages 79-112, February.
    3. repec:ehl:wpaper:59304 is not listed on IDEAS
    4. Mark Lorenzen & Lars Frederiksen, 2005. "On the Economics of Innovation Projects Product Experimentation in the Music Industry," DRUID Working Papers 05-23, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    5. Gerben Bakker, 2005. "The decline and fall of the European film industry: sunk costs, market size, and market structure, 1890–1927," Economic History Review, Economic History Society, vol. 58(2), pages 310-351, May.
    6. 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.
    7. Etro, Federico, 2018. "The Economics of Renaissance Art," The Journal of Economic History, Cambridge University Press, vol. 78(2), pages 500-538, June.
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    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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