Administrative trade barrier: An empirical analysis of exporting Hollywood movies to China

Abstract

Movies are among the US’s most successful exports, and China is by far the largest market. China welcomes high-quality US movies in order to grow its own theatrical market while also diligently protecting locally produced movies. China uses a movie import quota system to limit the number of foreign movies, half of which are delayed beyond the US release date by four or more weeks. We empirically study the Chinese government’s import decisions by developing a movie market demand model that integrates two models on concurrent and delayed releases where we consider release timing as an implicit trade barrier. We find that China tends to import US movies that are likely to expand the market demand but limits them from concurrent release when the potential cannibalization effect on local movies is high. Delayed releases of US movies are strongly associated with weaker box-office performance in China, making control of release schedule another vehicle that China leverages in import decisions.