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Sunday, November 25, 2012

Natural experiments and movies

This looks very cool. They use the Megaupload shutdown as a natural experiment to examine the effect of piracy on movie sales. Unfortunately the paper doesn't contain many details at this stage. Looks like they're basically comparing movies released in countries where Megaupload was shut down to movies released in countries where it wasn't.
Peukert and Claussen. Piracy and Movie Revenues: Evidence from Megaupload. In this paper we make use of a quasi-experiment in the market for illegal downloading to study movie box office revenues. Exogenous variation comes from the unexpected shutdown of the popular file hosting platform on January 19, 2012. The estimation strategy is based on a quasi difference-in-differences approach. We compare box office revenues before and after the shutdown to a matched control group of movies unaffected by the shutdown. We find that the shutdown had a negative, yet insignificant effect on box office revenues.This counterintuitive result may suggest support for the theoretical perspective of (social) network effects where file-sharing acts as a mechanism to spread information about a good from consumers with zero or low willingness to pay to users with high willingness to pay.


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