Spatial competition and market share: an application to motion pictures

This paper presents an empirical assessment of movie-theatre attendance in two major metropolitan markets and provides strong support for the importance of spatial characteristics in determining attendance. We consider the hypothesis that attendance at a particular movie theatre reflects a tension between two effects: a negative competition effect and a positive agglomeration effect. We find evidence that the competition effect dominates. Further, we identify a pattern of systematic spatial decay in the impact of this effect on demand. Copyright Springer Science+Business Media New York 2012