Movies vary widely in appeal, star power, cost, and other elements, and therefore, each might be expected to charge a different price. Multiplexes, however, typically charge the same price for all movies, except for such premium formats as 3D, a choice that has puzzled managers and researchers. Because of data limitations, minimal empirical work has directly addressed this issue. In Hong Kong, however, prices vary both within and across multiplexes. Using daily ticket prices and attendance by theater and movie, the authors empirically examine the potential gains from differentiated movie-specific pricing as well as the increasingly common two-tier (2D/3D) uniform pricing, as compared with a full uniform pricing strategy in which a theater charges the same price for all its movies. Their results show that differential pricing leads to higher profits than the two-tier uniform pricing practice, but that the improvement is limited. In contrast, the gains are substantial when compared with the full uniform pricing strategy, suggesting that only minimal differentiation (2D/3D) may obtain most of the gains available from fully differentiated prices.

This article examines how quality affects heterogeneous multiple-product firms’ exporting behaviours. We develop a structural model of the global movie market, including both consumers’ movie demand choices and firms’ exporting decisions. A movie studio is a multi-product firm that releases many movies within a year. We model movie quality as a combination of firm-level appeal and product-level attractiveness. We find that both studio-level and movie-level heterogeneity affect demand for movie, and movie-level heterogeneity is relatively more important. We also explore the counterfactual effects of quality improvement and trade liberalization on trade. Our results show that improvement of quality increases both intensive margin and extensive margin of trade. By elimination of quota, we find that trade liberalization increases movie exports to a foreign market by 19%. The results of our study can also help improve understanding of trade in the service industry. For instance, we do not find a positive correlation between the foreign entry costs and the geographic distance, as in the case of manufacture goods.

Many studies have shown that mergers and acquisitions (M&A) raise firms' productivity. Few researches investigate whether exporters can enhance export performance after M&A through higher levels of efficiency. Based on detailed information on M&A activities of Chinese firms, China's customs trade data and National Bureau of Statistics surveys, we investigate the causal effect of M&A on trade performance. In particular, the value and the volume of firm exports, product quality, product scope and the number of export destinations have been examined. We find positive and significant effects of M&A on all the examined indicators of export performance. These findings are generally robust to a variety of robustness checks. We further observe that state-owned firms are the least likely to benefit from M&A. We also obtain evidence that firms benefit more from M&A deals if they are targets or merge with foreign firms. Overall, this paper is to our knowledge the first study that uses micro-level data in multiple industries to examine the relationship between M&A and exports of heterogeneous firms. Our results deepen our understanding of the consequences of M&A by suggesting another potential benefit, and hence provide policy implications for merger regulation.

We examine the welfare effect of trade liberalization in the service industry by focusing on the Chinese movie industry. China has been maintaining an import quota of foreign movies since 1990s. Using a unique Chinese movie dataset, we first estimate a nested logit demand model. And based on the estimated demand parameters, we perform counterfactual tests by removing the movie import quota. Specifically, we quantify the loss to the domestic film makers due to greater competition with foreign competitors, and the gains to consumers from consuming more high quality movies. We find that after trade liberalization, the market share of domestic film makers falls by 21–22% on average during the sample period, whereas the gain in the consumer welfare is comparatively smaller with an increase of around 5–9%. We also find that if the domestic film makers react actively by either strategically changing the release dates or by improving the quality of the home-made movies, then the magnitude of decline in the producer welfare will reduce by a large extent.