Competition and Strategic Budget Choices in the Motion Picture Industry*
研究了电影产业中产品差异化如何影响企业在广告和产品质量上的最优投资，发现广告竞争在中等差异化水平最高，而产品质量随差异化单调递增。
In this article, we study the effect of differentiation on firms' optimal investments in advertising and product quality in the specific context of the motion picture industry. To guide our empirical analysis, we develop a stylized model uncovering that competition in advertising is the highest for intermediate levels of horizontal differentiation, while product quality increases monotonically in differentiation. We corroborate our theoretical predictions with a large dataset on the movie industry confirming both the inverted U‐shaped relationship between advertising and differentiation, and the monotonically increasing relationship between product quality and differentiation.