Strategic Promotion and Release Decisions for Cultural Goods

CORE DISCUSSION PAPER 2015/37

46 Pages Posted: 23 Jul 2015

See all articles by Paul Belleflamme

Paul Belleflamme

CORE and Louvain School of Management, UCL (Université Catholique de Louvain); CESifo (Center for Economic Studies and Ifo Institute)

Dimitri Paolini

DiSea & CRENOS, Università di Sassari; Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Date Written: July 23, 2015

Abstract

We study how producers of cultural goods can strategically increase their promotion budgets to secure the most profitable release dates for their goods. In a game-theoretic setting, where two producers choose their budget before simultaneously setting the release date of their good, we prove that two equilibria are possible: releases are either simultaneous (at the demand peak) or staggered (one producer delays). In the latter equilibrium, the first-mover secures its position by investing more in promotion. We test this prediction on a dataset of more than 1500 American movies released in ten countries over 13 years. Our empirical analysis confirms that higher budgets allow movie studios to move release dates closer to demand peaks.

Keywords: Non-price competition, Strategic promotion, Strategic timing, Motion pictures

JEL Classification: L13, L82

Suggested Citation

Belleflamme, Paul and Paolini, Dimitri, Strategic Promotion and Release Decisions for Cultural Goods (July 23, 2015). CORE DISCUSSION PAPER 2015/37. Available at SSRN: https://ssrn.com/abstract=2634894 or http://dx.doi.org/10.2139/ssrn.2634894

Paul Belleflamme (Contact Author)

CORE and Louvain School of Management, UCL (Université Catholique de Louvain) ( email )

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HOME PAGE: http://perso.uclouvain.be/paul.belleflamme/Site/Home.html

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Dimitri Paolini

DiSea & CRENOS, Università di Sassari ( email )

Piazza Universita
Sassari, 07100
Italy

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

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