Demand and Supply Dynamics for Sequentially Released Products in International Markets: The Case of Motion Pictures

Anita Elberse () and Jehoshua Eliashberg ()
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Anita Elberse: Harvard Business School, Morgan Hall, Soldiers Field, Boston, MA 02163
Jehoshua Eliashberg: University of Pennsylvania, 700 Jon M. Huntsman Hall, 3730 Walnut Street, Philadelphia, Pennsylvania 19104-6340

Marketing Science, 2003, vol. 22, issue 3, 329-354

Abstract: We develop an econometric model to study a setting in which a new product is launched first in its domestic market and only at a later stage in foreign markets, and where the product's performance (“demand”) and availability (“supply”) are highly interdependent over time within and across markets. Integrating literature on international diffusion, “success-breeds-success” trends, and the theatrical motion picture industry—the focus of the empirical analysis—we develop a dynamic simultanenous-equations model of the drivers and interrelationship of the behavior of consumers (“audiences”) and retailers (“exhibitors”). Our findings emphasize the importance of considering the endogeneity and simultaneity of audience and exhibitor behavior, and challenge conventional wisdom on the determinants of box office performance (which is predominantly based on modeling frameworks that fail to account for the interdependence of performance and availability). Specifically, we find that variables such as movie attributes and advertising expenditures, which are usually assumed to influence audiences directly, mostly influence revenuesdirectly, namely through their impact on exhibitors' screen allocations. In addition, consistent with the idea that the “buzz” for a movie is perishable, we find that the longer is the time lag between releases, the weaker is the relationship between domestic and foreign market performance—an effect mostly driven by foreign exhibitors' screen allocations.

Keywords: Dynamic Simultaneous Equations Modeling; International Release Strategies; Entertainment Marketing; Motion Picture Distribution and Exhibition; Channel Management (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (200)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:22:y:2003:i:3:p:329-354

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