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Why do Movie Studios Produce R-rated Films?

Brian Goff, Dennis Wilson and David Zimmer

Applied Economics and Finance, 2015, vol. 2, issue 1, 33-43

Abstract: R-rated films are correlated with lower box office revenues. Using sex and nudity content as an instrument to predict R-ratings, we show that R-ratings themselves are not the cause of lower revenues. Instead, R-rated films contain traits that lower revenues and the ratings act as a signal of those traits. Why do film producers include those traits and seek R-ratings? We show that R-ratings alter the shape of the distribution of critical reviews, shifting the distribution to the right. Moreover, even after controlling for other influences, R-ratings improve critical reviews, suggesting that producers not only seek box office revenues, but also critical acclaim.

Keywords: monopolistic quality choice; causal impact; quantile treatment effects (search for similar items in EconPapers)
JEL-codes: R00 Z0 (search for similar items in EconPapers)
Date: 2015
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Handle: RePEc:rfa:aefjnl:v:2:y:2015:i:1:p:33-43