Bakker, Gerben 
ORCID: 0000-0001-6109-0693
(2010)
Bedrijfsstrategieën, overheidsbeleid en de Europese filmmarkt tijdens het Interbellum.
Tijdschrift Voor Mediageschiedenis, 2.
pp. 13-36.
ISSN 1387-649X
Abstract
This paper identifies four basic economic characteristics underlying the evolution of the motion picture industry. First, the importance of endogenous sunk costs led to a quality race in the 1910s that left European companies behind. Second, the fact that marginal revenues equalled marginal profits led to extreme vertical integration. Third, a public-good characteristic of motion pictures – non-diminishability – led to a skewed income distribution among talent, with a few superstars taking most pay, although the Hollywood studios mitigated this with seven-year contracts. Fourth, the project-based nature of film production yielded large intra- and inter-industry agglomeration benefits, leading to geographical concentration. In reaction to this changing economic environment European firms formed alliances – eventually thwarted by the rise of protection and fascism – and focused on highly differentiated films. Policy makers reacted with protectionist legislation that offered European consumers more variety at the expense of quality; provided a countervailing power to the colluding Hollywood studios at the expense of increased national resources used in film production; enabled an improved balance of payment at the expense of trade friction with the u.s.; and created national agglomeration benefits possibly at the expense of other or new creative industries.
| Item Type: | Article |
|---|---|
| Official URL: | http://www.mediageschiedenis.nl/ |
| Additional Information: | © 2010 Boom Lemma uitgevers |
| Divisions: | Accounting Economic History |
| Subjects: | H Social Sciences > HC Economic History and Conditions P Language and Literature > PN Literature (General) > PN1993 Motion Pictures |
| JEL classification: | L - Industrial Organization > L8 - Industry Studies: Services > L82 - Entertainment; Media (Performing Arts, Visual Arts, Broadcasting, Publishing, etc.) |
| Date Deposited: | 20 Jun 2011 08:26 |
| Last Modified: | 01 Nov 2024 04:20 |
| URI: | http://eprints.lse.ac.uk/id/eprint/36850 |
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