nep-cul New Economics Papers
on Cultural Economics
Issue of 2008‒03‒25
three papers chosen by
Roberto Zanola
University of the Piemonte Orientale

  1. Does Sex Sell? A Look at the Effects of Sex and Violence on Motion Picture Revenues By David M. Switzer; David M. Lang
  2. Deterministic Adoption in Movie Industry By Ch’ng, Kean Siang; Lean, Hooi Hooi
  3. Efficiency Gain from Ownership Deregulation: Estimates for the Radio Industry By Howard Smith; Catherine O'Gorman

  1. By: David M. Switzer; David M. Lang (Department of Economics, St. Cloud State University)
    Abstract: The Motion Picture Association of America is responsible for assigning all movies one of five movie ratings (G, PG, PG-13, R, NC-17). Previous research has found that G and PG-rated movies perform better at the box office, yet movie studios continue to make more PG-13 and R-rated movies. Other research has used data on a film’s levels of sex, violence and profanity (SVP), to explore the link between SVP, movie rating, and box office revenues. In this paper, we use a more recent data set and include additional variables to account for movie quality to further explore this relationship. We investigate the issue of how the amount of SVP has changed in the last fifteen years. We also use theater-level data for a major Midwestern theater chain to extend our analysis beyond total box office revenues, examining the effects on revenues in four ticket categories: adult, child, senior citizen, and student. Finally, we explore the difference between foreign and domestic box office responses to SVP levels and suggest that there is a justifiable reason why movie studios continue to produce far more PG-13 and R movies than G and PG movies.
    Keywords: motion pictures, movies, violence, sex
    JEL: L82 Z11
    Date: 2007–01
  2. By: Ch’ng, Kean Siang; Lean, Hooi Hooi
    Abstract: In this paper, we investigate the decision making process by movie goers. Under incomplete information environment, movie goers will have to learn the quality of the movie from the information relayed by predecessors. The hypothesis is formed by the movie goers when the movie is first released, and it is then compared to information received. In this environment, movie goers will constantly upgrade the belief system, or discard the weaker ones if found to be not consistent with the overall quality information received. Thus, positive news relayed in the initial stage will be magnified to greater importance; the movie becomes a hit. We model this deterministic adoption with first order difference equation. We find that the Hit movies exhibit higher deterministic adoption behavior and the relationship between current and previous adoptions can last longer, than if the movie is a flop. The time path or orbit of the dynamic growth also exhibits non-oscillatory behavior and converge to equilibrium level quickly; when the deterministic adoption mechanism loses its strength, the subsequent adoptions will eventually die off. In other words, the previous adoptions cannot determine the future adoptions. Although this behavior is present in both Hit and Non-hit movies, this diminishing mechanism is triggered in much earlier stage in Non-hit movies than it is in Hit movies.
    JEL: L82 D01
    Date: 2007–10
  3. By: Howard Smith; Catherine O'Gorman
    Abstract: Reducing fixed cost duplication - a common justification for concentrated market structure - motivated the US government to relax the number of radio stations a firm could operate in any local market. After deregulation the number of firms per market decreased. The implied cost saving depends on the per market fixed costs incurred by each firm. Using data from 140 markets we estimate upper and lower bounds to fixed costs using (i) an empirical model of gross profit and (ii) the assumption that the observed post-deregulation market structure is a Nash equilibrium. The estimates suggest that the efficiency savings were significant.
    Keywords: Moment Inequalities, Deregulation
    JEL: L10 L40 L82
    Date: 2008

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