Motion picture production incentives and filming location decisions: a discrete choice approach

Synthetic control methods for comparative case studies: estimating the effect of California’s Tobacco Control Program

Mark Owens and Adam D Rennhoff

Journal of Economic Geography, 2020, vol. 20, issue 3, 679-709

Abstract: We use a discrete choice model to study the impact of tax incentives on firm location choices in situations involving heterogeneous geographic characteristics, heterogeneous firm preferences and large choice sets. We apply our model to investigate the impact of movie production incentives on filming location choices for movies produced from 1999 to 2013. We gather the characteristics of filming locations and use a machine-learning technique to define choice sets. We find production incentives can attract movies to a state, but the impact depends on the type of incentive offered, studio characteristics and inherent location geographic characteristics. Mid-sized studios respond to all forms of incentives, major studios respond only to refundable and transferable tax credits, and independent studios are not sensitive to any incentives. We fail to find strong evidence that incentives create a more permanent movie industry in a state. A counterfactual identifies the states most impacted by these policies. We supplement our discrete choice model with a simple cost-benefit analysis, which indicates that movie incentive programs are revenue-negative for states.

Keywords: Motion pictures; tax incentives; geographic variation; discrete choice models; machine learning (search for similar items in EconPapers)
JEL-codes: H32 H71 R38 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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