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Spatial Competition and Demand: An Application to Motion Pictures

Author

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  • Darlene C. Chisholm
  • George Norman

Abstract

This paper provides a rich assessment of the demand characteristics for movie theatre attendance in two major metropolitan markets and provides strong support for the importance of spatial characteristics in empirical demand analysis. We provide evidence of the usual competitive effect of location on an exhibitor’s demand but also find evidence of a clustering effect: when a group of theatres is in close proximity to each other, their proximity generates additional demand for all theatres within the cluster. The demographic evidence suggests that movie attendance is a normal good but does not support the commonly held industry view that young male viewers drive demand. Finally, we show that attendance at a particular theatre is affected by both the theatre’s attributes and the attributes of nearby competing theatres. The attributes we include cover physical features and theatre type.

Suggested Citation

  • Darlene C. Chisholm & George Norman, 2002. "Spatial Competition and Demand: An Application to Motion Pictures," Discussion Papers Series, Department of Economics, Tufts University 0216, Department of Economics, Tufts University.
  • Handle: RePEc:tuf:tuftec:0216
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    References listed on IDEAS

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    13. repec:cor:louvrp:-713 is not listed on IDEAS
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    Cited by:

    1. Chisholm, Darlene C. & Norman, George, 2004. "Heterogeneous preferences and location choice with multi-product firms," Regional Science and Urban Economics, Elsevier, vol. 34(3), pages 321-339, May.
    2. Alan Collins & Chris Hand, 2005. "Analyzing moviegoing demand: an individual-level cross-sectional approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(5), pages 319-330.
    3. Ricard Gil & Wesley Hartmann, 2007. "The Role and Determinants of Concession Sales in Movie Theaters: Evidence from the Spanish Exhibition Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 30(4), pages 325-347, June.

    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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