The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Motion Pictures, Economics of

  • W. David Walls
Reference work entry


Film-goers discover the films they like by consuming them, and through the exchange of information the demand for motion pictures evolves dynamically. The supply of screens adjusts in response to demand through flexible state-contingent exhibition contracts. This article presents an overview of the economics of motion pictures that focuses on how the demand process affects the distribution of outcomes, how the distribution of outcomes can be quantified with the use of statistical models, and how the industry’s organization and business practices can be understood in light of the behavioural and statistical models.


Asymmetric information Bose–Einstein distribution Contagion Motion pictures, economics of Optimal contracts Pareto distribution Power laws Superstars, economics of 

JEL Classifications

L82; L20; Z10; D40 
This is a preview of subscription content, log in to check access.


  1. Brock, W. 1999. Scaling in economics: A reader’s guide. Industrial and Corporate Change 8: 403–446.CrossRefGoogle Scholar
  2. Caves, R. 2000. Creative industries: Contracts between art and commerce. Cambridge, MA: Harvard University Press.Google Scholar
  3. Chisholm, D. 1993. Asset specificity and long-term contracts: The case of the motion-pictures industry. Eastern Economic Journal 19: 143–155.Google Scholar
  4. Chisholm, D. 1997. Profit-sharing versus fixed-payment contracts: Evidence from the motion pictures industry. Journal of Law, Economics, and Organization 13: 169–201.CrossRefGoogle Scholar
  5. De Vany, A., and R. Eckert. 1991. Motion picture antitrust: The Paramount cases revisited. Research in Law and Economics 14: 51–112.Google Scholar
  6. De Vany, A., and H. McMillan. 2004. Was the antitrust action that broke up the movie studios good for the movies? Evidence from the stock market. American Law and Economics Review 6: 135–153.CrossRefGoogle Scholar
  7. De Vany, A., and W.D. Walls. 1996. Bose–Einstein dynamics and adaptive contracting in the motion picture industry. Economic Journal 106: 1493–1514.CrossRefGoogle Scholar
  8. De Vany, A., and W.D. Walls. 1999. Uncertainty in the movie industry: Does star power reduce the terror of the box office? Journal of Cultural Economics 23: 285–318.CrossRefGoogle Scholar
  9. De Vany, A., and W.D. Walls. 2002. Does Hollywood make too many R-rated movies?: Risk, stochastic dominance, and the illusion of expectation. Journal of Business 75: 425–451.CrossRefGoogle Scholar
  10. De Vany, A., and W.D. Walls. 2004. Motion picture profit, the stable Paretian hypothesis, and the curse of the superstar. Journal of Economic Dynamics and Control 28: 1035–1057.CrossRefGoogle Scholar
  11. Epstein, J., and R. Axtell. 1996. Growing artificial societies: Social science from the bottom up. Cambridge, MA: Brookings Institution and MIT Press.Google Scholar
  12. Feller, W. 1957. An introduction to probability theory and its applications. New York: Wiley.Google Scholar
  13. Frisch, U., and D. Sornette. 1997. Extreme deviations and applications. Journal de Physique 1: 1155–1171.Google Scholar
  14. Hand, C. 2001. Increasing returns to information: Further evidence from the UK film market. Applied Economics Letters 8: 419–421.CrossRefGoogle Scholar
  15. Jovanovic, B. 1987. Micro shocks and aggregate risk. Quarterly Journal of Economics 17: 395–409.CrossRefGoogle Scholar
  16. Kindem, G. (ed.). 1982. The American movie industry: The business of motion pictures. Carbondale: Southern Illinois University Press.Google Scholar
  17. Levy, M., and S. Soloman. 1997. New evidence for the power law distribution of wealth. Physica A 242: 90–94.CrossRefGoogle Scholar
  18. Mandelbrot, B. 1963. New methods in statistical economics. Journal of Political Economy 71: 421–440.CrossRefGoogle Scholar
  19. Mantegna, R., and H. Stanley. 1995. Scaling in financial markets. Nature 376: 46–49.CrossRefGoogle Scholar
  20. McCulloch, J. 1996. Financial applications of stable distributions. In Statistical methods in finance, vol. 14 of handbook of statistics, ed. G. Maddala and C. Rao. New York: North-Holland.Google Scholar
  21. McCulloch, J. 1998. Numerical approximation of the symmetric stable distribution and density. In A practical guide to heavy tails: Statistical techniques and applications, ed. R. Adler, R. Feldman, and M. Taqqu. Berlin: Birkhäuser.Google Scholar
  22. Rusco, F., and W.D. Walls. 2004. Independent film finance, pre-sale agreements, and the distribution of film earnings. In The economics of art and culture, Contributions to Economic Analysis, vol. 260, ed. V. Ginsburgh. Amsterdam: Elsevier.Google Scholar
  23. Sedgwick, J. 2000. Popular filmgoing in 1930s Britain: A choice of pleasures. Exeter: University of Exeter Press.Google Scholar
  24. Sornette, D. 1998. Multiplicative processes and power laws. Physical Review E 57: 4811–4813.CrossRefGoogle Scholar
  25. Uchaikin, V., and V. Zolotarev. 1999. Chance and stability: Stable distributions and their applications. Utrecht: VSP.CrossRefGoogle Scholar
  26. Walls, W.D. 1997. Increasing returns to information: Evidence from the Hong Kong movie market. Applied Economics Letters 4: 187–190.CrossRefGoogle Scholar
  27. Walls, W.D. 2000. Measuring and managing uncertainty with an application to the Hong Kong movie business. International Journal of Management 17: 118–127.Google Scholar
  28. Walls, W.D. 2005a. Demand stochastics, supply adaptation, and the distribution of film earnings. Applied Economics Letters 12: 619–623.CrossRefGoogle Scholar
  29. Walls, W.D. 2005b. Modeling movie success when ‘nobody knows anything’: Conditional stable-distribution analysis of film returns. Journal of Cultural Economics 29(3): 177–190.CrossRefGoogle Scholar
  30. Weinstein, M. 1998. Profit-sharing contracts in Hollywood: Evolution and analysis. Journal of Legal Studies 27: 67–112.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • W. David Walls
    • 1
  1. 1.