Self-regulation vs state regulation: Evidence from cinema age restrictions∗ Ryan Lampey and Shaun McRaez November 25, 2020 Abstract This paper studies the effect of self-regulation on the leniency of cinema age re- strictions using cross-country variation in the classifications applied to 1,922 movies released in 31 countries between 2002 and 2011. Our data show that restrictive classifi- cations reduce box office revenues, particularly for movies with wide box office appeal. These data also show that self-regulated ratings agencies display greater leniency than state-regulated agencies when classifying movies with wide appeal. However, consistent with theoretical models of self-regulation, the degree of leniency is small because it is not costly for governments to intervene and regulate ratings themselves. ∗We wish to thank Brian Adams, Jin Choi, Nik Kohrt, Anthony Niblett, Christian Peukert, and seminar participants at the Center for Advanced Study in the Behavioral Sciences at Stanford University, California State University, East Bay, DePaul University, 2014 International Industrial Organization Conference, 2013 Mallen Economics of Filmed Entertainment Conference, Northern Illinois University, Purdue University, the University of California Santa Cruz, and the University of Missouri for helpful comments. McRae gratefully acknowledges financial support from the Asociación Mexicana de Cultura, A.C. Nicholas Jasinski, Shatakshi Shandilya, Matthew Sido, and Josh Wagner provided excellent research assistance. All errors are our own. yDepartment of Economics, California State University, East Bay. Email:
[email protected]. zCentro de Investigación Económica and Department of Economics, ITAM. Email:
[email protected]. 1 1 Introduction Self-regulation, in which an industry-level organization determines and enforces the rules and standards of conduct for firms in the industry, is an important feature of many sectors including advertising, financial services, legal services, and industrial chemicals.