American Beauty: Trade Flows and Export Costs of US Movies

Abstract

Copyright industries face global fixed export costs, in terms of cultural and geographic distance together with formal trade barriers. Adjustment to these costs may occur along both the intensive and the extensive margin. We investigate this issue using a microeconomic approach that considers a hedonic model of revenues for US movie exports to evaluate: aggregation bias; simultaneity in the observation of imported movies and their revenues; and reliable estimations for country clusters. We find that product heterogeneity is a key element for both intensive and extensive margin adjustments at the country level.