Movie Variety and the City

Abstract

Abstract In this article, I study the effect of entry and ownership structure on product variety within a city. Using longitudinal data on theaters in Korea, I find that the positive effect of entry on city-wide movie variety is limited only to the first few entrants. This finding, together with the observation that movie variety in a theater does not respond to entry, suggests that a theater's incentive to soften price competition by screening less popular movies not otherwise available in the city decreases as more theaters enter. I also find evidence that movie variety is greater in more concentrated cities, implying that a chain that owns multiple theaters in a city may differentiate the movie lineup offered in each theater more than when the theaters are individually owned in order to avoid cannibalization or to preempt entry.