Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Eurasian Business Review
Published in: Eurasian Business Review 2/2015

01-12-2015 | Original Paper

The impact of deregulation on the movie box office after Taiwan’s entry into the WTO: the difference-in-differences estimation

Authors: Wen-jhan Jane, Wei-peng Chen, Yuan-lin Hsu

Published in: Eurasian Business Review | Issue 2/2015

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

This article estimates the impact of Taiwan’s Entry into the WTO on the movie box office. A sample of 2392 box office movies for the period 2002–2010 was examined by using difference-in-differences (DiD) models. The impact of Taiwan’s entry into the WTO on the movie box office was found to be negative by at least 1.83 million USD per year. Contrary to the normal perception of a preference for foreign (Hollywood) movies, the evidence based on a short-run analysis shows that Taiwanese preferred local movies. Compared to foreign movies, a local movie’s box office receipts were on average 2.03–2.41 % higher, ceteris paribus. The evidence corresponds to the discussion of the cultural premium.
previous article Again on trade elasticities: evidence from a selected sample of countries
next article The impact of the global financial crisis on cross-border mergers and acquisitions: a continental and industry analysis

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now
Footnotes
1
The protection policy for the local industry was found in the Motion Pictures Act.
 
2
There are cultural exceptions to the GATT principles for cultural goods and services. The cultural exception is to treat cultural goods and services differently from other traded goods and services. A notable example is France. France maintains quotas and subsidies to protect its cultural market from other nations’ cultural products, most notably American, in particular in relation to movies, television and radio.
 
3
Although deregulation took place in 2002, the impact on the box office was felt the most in 2003. This paper focuses on an analysis of the real impact.
 
4
According to Hollywood.com, 596 films were released in North America in 2011. The number of American films was 371, and 225 non-American films. Total box office receipts amounted to 10.157 billion US dollars.
 
5
De Vany and Walls have contributed significantly to this area and their research is collated in De Vany (2004) which provides a useful survey of the literature. See, in particular, De Vany and Walls (1996, 1999, 2004). See also Walls (1997).
 
6
Children over the age of six can see movies classified as protected. Teenagers can see movies classified as requiring parental guidance, but may watch them only with parental guidance. People over the age of 18 can see movies classified as restricted.
 
7
The average exchange rate during the 2002–2003 data period was 1US$ = 34.3275 NT$. The average exchange rate during the 2002–2010 data period was 1US$ = 32.6128 NT$.
 
8
Total box office revenues cover the film’s entire run, and they are classified according to the movie’s release date. Only 6 of the 1334 movie runs cover two calendar years. These movies include The Lord of the Rings: The Two Towers, Extreme Ops, The Hot Chick, My Big Fat Greek Wedding, Femme Fatale, and The Ring.
 
9
The log specification of box office revenue is also employed to check the robustness of the findings. The results correspond to our findings, and they are available from the author upon request.
 
10
In the DiD estimation, the coefficients of local movies (treated group) in 2003 (post-treatment) in the short run and local movies (treated group) after 2003 (post-treatment) in the long run were consistent.
 
11
From this statistic, the evidence maybe partially reinforces that cultural premium which was caused by the same language in China and Taiwan.
 
Literature
Acheson, K., & Maule, C. J. (1994). Understanding Hollywood’s Organization and Continuing Success. Journal of Cultural Economics, 18(4), 271–300.CrossRef
Alesina, A., Nicoletti, G., Ardagna, S., & Schiantarelli, F. (2005). Regulation and investment. Journal of the European Economic Association, 3, 791–825.CrossRef
Ashenfelter, O. (1978). Estimating the effect of training programs on earnings. Review of Economics and Statistics, 60(1), 47–57.CrossRef
Ashenfelter, O., & Card, D. (1985). Using the longitudinal structure of earnings to estimate the effect of training programs. Review of Economics and Statistics, 67(4), 648–660.CrossRef
Basuroy, S., Chatterjee, S., & Ravid, S. A. (2003). How critical are critical reviews? the box office effects of film critics, star power, and budgets. Journal of Marketing, 67, 103–117.CrossRef
Blanchard, O. J., & Giavazzi, F. (2003). Macroeconomic effects of regulation and deregulation in goods and labor markets. Quarterly Journal of Economics, 118, 879–908.MATHCrossRef
Blumenthal, M. A. (1988). Auctions with constrained information: blind bidding for motion pictures. Review of Economics and Statistics, 70(2), 191–198.CrossRef
Breusch, T., & Pagan, A. (1979). A simple test for heteroscedasticity and random coefficient variation. Econometrica, 47, 1287–1294.MATHMathSciNetCrossRef
Campbell, J. R., & Hopenhayn, H. A. (2005). Market size matters. Journal of Industrial Economics, 53, 1–25.CrossRef
Chisholm, D. C. (1993). Asset specificity and long-term contracts: the case of the motion-pictures industry. Eastern Economic Journal, 19(2), 143–155.
Chisholm, D. C., & Norman, G. (2004). Heterogeneous preferences and location choice with multi-product firms. Regional Science and Urban Economics, 34(3), 321–339.CrossRef
Collins, A., Hand, C., & Snell, M. (2002). What makes a blockbuster? economic analysis of film success in the UK. Managerial and Decision Economics, 23(6), 343–354.CrossRef
Davis, P. (2006a). Measuring the business stealing, cannibalization and market expansion effects of entry in the U.S. motion picture exhibition market. Journal of Industrial Economics, 54(3), 293–321.CrossRef
Davis, P. (2006b). Spatial Competition in Retail Markets: Movie Theaters. Rand Journal of Economics, 37(4), 964–982.CrossRef
De Vany, A. (2004). Hollywood economics: how extreme uncertainty shapes the film industry. Routledge.
De Vany, A., & Eckert, R. (1991). Motion picture antitrust: the paramount cases revisited. Research in Law and Economics, 14, 51–112.
De Vany, A. S., & McMillan, H. (2004). Was the antitrust action that broke up the movie studios good for the movies? Evidence from the stock market. American Law and Economics Review, 6(1), 135–153.CrossRef
De Vany, A., & Walls, D. (1996). Bose-einstein dynamics and adaptive contracting in the motion picture industry. The Economic Journal, 106, 1493–1514.CrossRef
De Vany, A., & Walls, D. (1999). Uncertainty in the movie industry: does star power reduce the terror of the box office? Journal of Cultural Economics, 23, 285–318.CrossRef
De Vany, A., & Walls, D. (2004). Motion picture profit, the stable paretian hypothesis, and the curse of the super star. Journal of Economic Dynamics & Control, 28, 1035–1057.CrossRef
Djankov, S., La Porta, R., Lopez-De-Silanes, F., & Shleifer, A. (2002). The regulation of entry. Quarterly Journal of Economics, 117(1), 1–37.CrossRef
Dupagne, M., & Waterman, D. (1998). Determinants of U.S. television fiction imports in Western Europe. Journal of Broadcasting and Electronic Media, 42, 208–220.CrossRef
Einav, L. (2007). Seasonality in the U.S. motion picture industry. Rand Journal of Economics, 38(1), 127–145.CrossRef
Elberse, A., & Eliashberg, J. (2003). Demand and supply dynamics for sequentially released products in international markets: the case of motion pictures. Marketing Science, 22(3), 329–354.CrossRef
Ericson, R., & Pakes, R. (1995). Markov perfect industry dynamics: a framework for empirical work. Review of Economic Studies, 62(1), 53–82.MATHCrossRef
Fee, E. (2002). The costs of outside equity control: evidence from motion picture financing decisions. Journal of Business, 75(4), 681–712.CrossRef
Garciano, L., C. LeLarge, and J. Van Reenen (2012). Firm size distortions and the productivity distribution: evidence from France. Centre for Economic Performance discussion paper No. 1128, February 2012.
Gemser, G., Van Oostrum, M., & Leenders, M. (2007). The impact of film reviews on the box office performance of art house versus mainstream motion pictures. Journal of Cultural Economics, 31, 43–63.CrossRef
Goettler, R. L., & Leslie, P. (2005). Co-financing to manage risk in the motion picture industry. Journal of Economics and Management Strategy, 14(2), 231–261.CrossRef
Hand, C. (2001). Increasing returns to information: further evidence from the uk film market. Applied Economics Letters, 8(6), 419–421.CrossRef
Hanssen, F. A. (2002). Revenue-sharing in movie exhibition and the arrival of sound. Economic Inquiry, 40(3), 380–402.CrossRef
Jansen, C. (2005). The performance of german motion pictures, profits and subsidies: some empirical evidence. Journal of Cultural Economics, 29(3), 191–212.CrossRef
Lee, S. W. (2002). An economic analysis of the movie industry in Japan. The Journal of Media Economics, 15(2), 125–139.CrossRef
Litman, B. R. (1983). Predicting success of theatrical movies: an empirical study. Journal of Popular Culture, 16(spring), 159–175.CrossRef
Litman, B. R., Ahn H. (1998). Predicting Financial Success of Motion Pictures, in The Motion Picture Mega-Industry, B. R. Litman, ed. Needham Heights, MA: Allyn Bacon: 172–197.
Litman, B. R., & Kohl, L. S. (1989). Predicting Financial Success of Motion Pictures: The’80 s Experience. Journal of Media Economics, 2, 35–50.CrossRef
Lucas, R. E. (1978). On the size distribution of business firms. Bell Journal of Economics, 9(2), 508–523.CrossRef
Luttmer, E. (2007). Selection, growth, and the size distribution of firms. The Quarterly Journal of Economics, 122(3), 1103–1144.MATHCrossRef
McKenzie, J. (2008). Bayesian information transmission and stable distributions: motion picture revenues at the Australian box office. Economic Record, 84(266), 338–353.CrossRef
Melitz, M. J. (2003). The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica, 71, 1695–1725.MATHMathSciNetCrossRef
Moul, C. (2001). Evidence of qualitative learning-by-doing from the advent of the talkie. Journal of Industrial Economics, 49(1), 97–109.CrossRef
Moul, C. (2007). Measuring word-of-mouth’s impact on theatrical movie admissions. Journal of Economics and Management Strategy, 16(4), 859–892.CrossRef
Orbach, B. Y., & Einav, L. (2007). Uniform prices for differentiated goods: the case of the movie-theater industry. International Review of Law and Economics, 27(2), 129–153.CrossRef
Palia, D., Ravid, S. A., & Reisel, N. (2008). Choosing to cofinance: analysis of project-specific alliances in the movie industry. Review of Financial Studies, 21(2), 483–511.CrossRef
Prag, J., & Casavant, J. (1994). An empirical study of the determinants of revenue and marketing expenditures in the motion picture industry. Journal of Cultural Economics, 18(3), 217–235.CrossRef
Ravid, S. Abraham. (1999). Information, blockbusters, and stars: a study of the film industry. Journal of Business, 72(October), 463–492.CrossRef
Ravid, S. A., Wald, J., & Basuroy, S. (2006). Distributors and film critics: does it take two to tango? Journal of Cultural Economics, 30, 201–218.CrossRef
Reinstein, D., & Snyder, C. (2005). The influence of expert reviews on consumer demand for experience goods: a case study of movie critics. The Journal of Industrial Economics, 103(1), 27–51.CrossRef
Rosen, S., & Rosenfield, A. M. (1997). Ticket pricing. Journal of Law and Economics, 40(2), 351–376.CrossRef
Rusco, F. W. and W. D. Walls (2004). Independent film finance, pre-sale agreements, and the distribution of film earnings, in The Economics of Art and Culture, V. Ginsburgh ed., Contributions to Economic Analysis No. 260, Chapter 2, Amsterdam, Holland: Elsevier: 19–32.
Sochay, S. (1994). Predicting the performance of motion pictures. The Journal of Media Economics, 7(4), 1–20.CrossRef
Srivastava, D., & Mittal, A. (1987). On the economics of entertainment: optimal length of movie runs. Indian Economic Journal, 35(1), 66–82.
Syverson, C. (2004). Market structure and productivity: a concrete example. Journal of Political Economy, 112, 1181–1222.CrossRef
Walls, W. D. (1997). Increasing returns to information: evidence from the Hong Kong movie market. Applied Economics Letters, 4, 187–190.CrossRef
Metadata
Title
The impact of deregulation on the movie box office after Taiwan’s entry into the WTO: the difference-in-differences estimation
Authors
Wen-jhan Jane
Wei-peng Chen
Yuan-lin Hsu
Publication date
01-12-2015
Publisher
Springer International Publishing
Published in
Eurasian Business Review / Issue 2/2015
Print ISSN: 1309-4297
Electronic ISSN: 2147-4281
DOI
https://doi.org/10.1007/s40821-015-0025-1

Other articles of this Issue 2/2015

Eurasian Business Review 2/2015 Go to the issue

Original Paper

The impact of ownership structure and family board domination on voluntary disclosure for Jordanian listed companies

Original Paper

The impact of the global financial crisis on cross-border mergers and acquisitions: a continental and industry analysis

Original Paper

Effect of women’s labor market status on online grocery shopping, the case of Turkey

Original Paper

Cameras tracking shoppers: the economics of retail video surveillance

Original Paper

Innovation and export performance: do young and mature innovative firms differ?

Original Paper

Again on trade elasticities: evidence from a selected sample of countries