Blockbusters and market expansion: evidence from the motion picture industry

Like other cultural industries, the theatrical film industry is subject to the 'blockbuster effect', where popular products often dominate their competition by orders of magnitude over relatively short-run time horizons. This paper investigates this particular feature of the industry and the implication for overall market size. Using simple regression analysis, a positive relationship between (product-level) market concentration and market size is established using weekly box office revenue data from the US motion picture industry. This empirical evidence supports a simple theoretical model of heterogeneous consumers who selectively participate in the market.