Friday, July 31, 2015

Estimating a War of Attrition: The Case of the US Movie Theater Industry

Yuya Takahashi, Johns Hopkins is Estimating a War of Attrition: The Case of the US Movie Theater Industry.

ABSTRACT: This paper empirically studies firm's strategic exit decisions in an environment where demand is declining. Specifically, I quantify the extent to which the exit process generated by firms' strategic interactions deviates from the outcome that maximizes industry profits. I develop and estimate a dynamic exit game using data from the US movie theater industry in the 1950s, when the industry faced demand declines. Using the estimated model, I quantify the magnitude of strategic delays and find that strategic interactions cause an average delay of exit of 2.7 years. I calculate the relative importance of several components of these strategic delays.

https://lawprofessors.typepad.com/antitrustprof_blog/2015/07/estimating-a-war-of-attrition-the-case-of-the-us-movie-theater-industry.html

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