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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.

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  • 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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    Cited by:

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    3. Borowiecki, Karol Jan & Dahl, Christian Møller, 2021. "What makes an artist? The evolution and clustering of creative activity in the US since 1850," Regional Science and Urban Economics, Elsevier, vol. 86(C).
    4. 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.
    5. 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.
    6. Gerben Bakker, 2007. "The Evolution of Entertainment Consumption and the Emergence of Cinema, 1890–1940," Advances in Austrian Economics, in: The Evolution of Consumption: Theories and Practices, pages 93-137, Emerald Group Publishing Limited.
    7. Lorenzen, Mark & Täube, Florian Arun, 2008. "Breakout from Bollywood? The roles of social networks and regulation in the evolution of Indian film industry," Journal of International Management, Elsevier, vol. 14(3), pages 286-299, September.
    8. 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.
    9. 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.
    10. Borowiecki, Karol Jan, 2019. "The Origins of Creativity: The Case of the Arts in the United States since 1850," Discussion Papers on Economics 11/2019, University of Southern Denmark, Department of Economics.
    11. 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.
    12. 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.
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    14. Michael Pokorny & John Sedgwick, 2010. "Profitability trends in Hollywood, 1929 to 1999: somebody must know something1," Economic History Review, Economic History Society, vol. 63(1), pages 56-84, February.
    15. Laussel, Didier & Lahmandi-Ayed, Rim, 2010. "Natural oligopolies with exogenous sunk costs: A non-Suttonian result," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 844-854, September.
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    17. 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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