The Economic History Review

The decline and fall of the European film industry: sunk costs, market size, and market structure, 1890–19271

Volume 58 Issue 2
Home > The Economic History Review > The decline and fall of the European film industry: sunk costs, market size, and market structure, 1890–19271
Pages: 310-351Authors: GERBEN BAKKER
Published online: April 14, 2005DOI: 10.1111/j.1468-0289.2005.00306.x

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In the 1900s, the European film industry exported throughout the world, at times supplying half the US market. By 1920, however, European films had virtually disappeared from America, and had become marginal in Europe. Theory on sunk costs and market structure suggests that an escalation of sunk costs during a rapid US growth phase resulted in increased concentration; eight surviving companies dominated international film production and distribution forever after. European film companies, although overall profitable, could not take part, and after the war could not catch up. US, British, and French time series data for 1890-1930 support the theory.

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