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Residential Segregation, Discrimination, and African-American Theater Entry during Jim Crow

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Abstract

We examine the effect of residential segregation on the entry of movie theaters serving African-American customers in the 1950s, which provided an alternative to the segregated theaters of the Jim Crow era. Consistent with preference externalities in racial and ethnic enclaves, we find that greater residential segregation was associated with more African-American theater entry. Estimates from a model of firm entry indicate that residential segregation increased the variable profits of African-American movie theaters, reducing the market size required for theater entry by 13.3 percent for a one standard deviation increase in segregation. We also provide evidence that racial bias increased both variable profits and fixed costs, and on net reduced African-American theater entry. An interpretation consistent with this finding is that racial animus forced black customers toward segregated accommodations while also limiting access to key inputs for potential entrants.

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... Peach (1996) argues that while "good" and "bad" segregation are interrelated, they are distinct concepts, which has led to misunderstandings as to the relationship between social processes and urban spatial patterns. Gil and Marion (2018) evidenced a similar phenomenon in a historical study of small businesses, where there was a positive relationship between residential segregation and market concentration of African American movie theaters. Our study provides additional evidence to Gil and Marion's (2018) proposal of positive outcomes (e.g. ...
... Gil and Marion (2018) evidenced a similar phenomenon in a historical study of small businesses, where there was a positive relationship between residential segregation and market concentration of African American movie theaters. Our study provides additional evidence to Gil and Marion's (2018) proposal of positive outcomes (e.g. improved consumption in horizontally differentiated goods) associated with higher levels of residential segregation. ...
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... Gil and Marion (2018) evidenced a similar phenomenon in a historical study of small businesses, where there was a positive relationship between residential segregation and market concentration of African American movie theaters. Our study provides additional evidence to Gil and Marion's (2018) proposal of positive outcomes (e.g., improved consumption in horizontally differentiated goods) associated with higher levels of residential segregation. ...
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... At the local market level, spatial competition and ownership structures have been studied with respect to inter-cinema programming decisions (Chisholm et al., 2010;Chisholm & Norman, 2012;Elizalde, 2013). Entry and exit decisions, as well as competition between city, suburban, and regional cinemas, have also provided research topics in both historical and contemporary contexts (Collins et al., 2009b;Gil & Marion, 2018;Orhun et al., 2016;Sedgwick et al., 2014;Takahashi, 2015). At the cinema level, applied and theoretical research examines the profit implications from common uniform ticket pricing practices of the industry (Chen, 2009; (Bohme & Muller, 2011). ...
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