The decline and fall of the European film industry: sunk costs, market size and market structure, 1890-1927
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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- 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.
- John Sutton, 1997. "One Smart Agent," RAND Journal of Economics, The RAND Corporation, vol. 28(4), pages 605-628, Winter.
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