The Competitive Balance of the Italian and American Film Industries

Abstract

Since the early 1970s, the box-office market shares of Italian films in Italy have greatly diminished, while the shares of American films have comparably increased. Italian films have also lost a once significant market share in the US to American films. Using an economic model of international trade in media products, we argue that one reason for the better performance of the US film industry is that the US has been relatively more successful than Italy in growing its commercially supported domestic media for exhibiting films, especially the video media of pay television and video cassettes. This accelerated domestic media development has apparently provided American producers with an economic support base for greater increases in commercial film production investment levels than Italian producers could sustain, leading in turn to relatively more plentiful and more appealing American film products.