Year of Publication

2010

College

Martin School of Public Policy and Administration

Degree Name

Master of Public Policy

Executive Summary

These days, the U.S. films’ market share in the world is almost 70 percent and many countries have devised various means, including import quota, screen quota, subsidy, and tax concessions to protect the domestic film industry by preserving local film’s market share against U.S. film domination. Retaining these policies has important symbolic reasons because market share of the domestic film is related to preserving each country’s cultural sovereignty. However, the effectiveness of the economic policies is murky. If the policies do not bring any advantageous effect to the domestic film industry, there is no rational justification for sticking with them. Although these policies are permissible under current international trade agreements, quotas are not a promising means of protectionism because implementing those regulations can be problematic in trade and relationships with other countries, especially the U.S. Also, if subsidies and tax concessions do not have any positive impact on the domestic film industry, those policies may waste public money.

Thus, to examine the impact of the policies on the domestic film markets, this study explores the relationship between screen quotas, subsidies, tax concessions and market share of the domestic film, controlling for economic factors, such as GDP, the number of domestic films produced, and the average budget per film. Two years of data for 2004 and 2008 for 44 countries are used. On the basis of the result of OLS, fixed-effects, and random-effects regression, this study supports the following conclusions: First, there was little impact of economic policies of screen quota, subsidy, and tax concessions on the market share of domestic films whereas import quotas were found to have a significant impact on domestic film market shares. Also, when these regulatory factors were controlled, market size was not a significant determinant. Finally, as variables having an impact on the market share of the domestic film, the number of domestic films and the average budget per film were statistically significant. Based on the results, countries can take some options to increase their domestic films’ market share by improving the average budget per film and by increasing the number of domestic films produced. This implies that film production support efforts should be balanced between quality and quantity. Import quotas also increase domestic film market shares, but at the risk of damaging trade relations.

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