Cultural and Other Barriers to Motion Pictures Trade

By Marvasti, Akbar; Canterberry, E. Ray | Economic Inquiry, January 2005 | Go to article overview

Cultural and Other Barriers to Motion Pictures Trade


Marvasti, Akbar, Canterberry, E. Ray, Economic Inquiry


I. INTRODUCTION

The U.S. motion picture industry has long dominated world markets, but its recent expansion has been especially dramatic. Hollywood's current share of the world film market has doubled since just 1990, whereas the European film industry is about one-ninth the size it was in 1945. In the 1960s foreign films constituted 10% of the U.S. market; by 1986 they made up 7%, and today only about three-quarters of 1%. Remarkably, the global dominance of American films has evolved despite extensive protectionist efforts by other countries and virtually no barriers to trade by the United States. As to other countries, we might expect to find much more active, effective protectionism against a culturally sensitive product than against generic products and services. The characteristics of the product would suggest that the fate of U.S. motion picture exports would have at least mirrored the decline in American textiles and steel. To the contrary, the U.S. motion picture industry has been winning the global ballgame despite three strikes against it--protectionism, rising real domestic costs, and relatively stable real domestic ticket prices.

We address this quandary of why protectionism fails in a cultural industry where protectionism is expected to succeed. We do so first by examining the structure of the U.S. domestic motion picture industry. As it turns out, this structure provides a special impetus for exports. We next examine the nature of protectionism in a world of soaring demand for films. In this setting the American movie is a world product in a different sense than, say, the automobile. The American movie is a world product because its presence is dominant; the automobile is a world product mostly because its parts are interchangeable. By its nature the American movie appears to have few substitutes, even though Hollywood can use foreign locales for filming.

American movies encounter different protectionist strategies in different places. The divides fall either side of highly industrialized nations versus less developed nations, English-speaking versus non-English-speaking people, literate versus less literate people, and so on. Some countries and regions combine fees with subsidies, whereas others engage in piracy, quantitative, or service restrictions. Few countries have traditional tariffs.

Once we have defined the characteristics of the U.S. movie industry and foreign strategies of protectionism, we can better identify the relevant variables and appropriate models to explain not only industry exports but also the failure of protectionism. We end up with a complex gravity-iceberg model as a method of estimating U.S. motion picture exports. Because of the nature of the industry, our approach shares some of the characteristics of earlier studies in which economies of scale and imperfect competition are present. Although early gravity models have focused on spatial distance, some economists have interpreted the effects of "distance" as possibly nonphysical. Thus, "cultural distance" applied to a culturally sensitive industry could be a reasonable interpretation for distance effects. After using microdata to explore protectionist strategies, we then aggregate these data for the formal model.

II. STRUCTURE OF THE U.S. MOTION PICTURES INDUSTRY: WHY EXPORT?

What determines the structure and size of market for American films'? Movie studios are both producers and distributors. Though movie studio revenues depend directly on net revenues (gross revenues minus total costs), the size and extent of the movies market remain tightly linked to gross revenue, including domestic box office. From the perspective of the studios, aggregate market size (S) is

(1) S = [n.summation over (i=1)] ([R.sub.i] + [X.sub.i]),

where [R.sub.i] is gross domestic box office and [X.sub.i] is the U.S. dollar value of exports (rentals, video tapes) of the ith of n movie studios. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Cultural and Other Barriers to Motion Pictures Trade
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.