Product Differentiation and Film-Programming Choice: Do First-Run Movie Theatres Show the Same Films

We present an empirical analysis of product differentiation using a new dynamic panel data set on film programming choice in a major U.S. metropolitan motion-pictures exhibition market. Using these data, we compute two measures of film programming choice, which allow us to investigate the determinants of strategic product differentiation in a multi-characteristics space. Our evidence is consistent with the idea that the degree of product differentiation between theatre pairs reflects a balance between strategic concerns and contractual constraints. Similarity in one dimension is offset by differentiation in others. Our results further suggest that the degree of product differentiation is negatively related to market size. Finally, we find that ownership matters: theatres under common ownership make more similar programming choices than theatres with different owners