College of Business
In the market for US theatrical movies, there are a set of products (movies), and over time, new products appear and existing products disappear. We develop and estimate a model of the product cycle for movies and the decay of products over time to examine the effect of product quality, production cost, advertising and substitutes on the movie life cycle. Intuitively, new products should have a strong negative effect on the probability of survival of existing movies. The effect, however, is heterogeneously present only for the substitutes from some types (genres). While it is expected that good-quality movies tend to survive longer in theatres and greater level of advertising also has a positive effect, our study finds that these variables slow down the rate of decay in the life cycle of movies, particularly towards the end of the product life cycle.
Journal of International Business and Economics
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Scholarly Commons Citation
Gokhale, J. S., & Wilson, W. (2017). Product Life-Cycle: New Products, Quality, Substitutes and Advertising in the Theatrical Movie Markets. Journal of International Business and Economics, 17(4). https://doi.org/10.18374/JIBE-17-4.9