The Effects of Competitive Density on Traded and Local Market Performance in the Nonprofit Performing Arts Sector

Abstract

This study examines the effects of local competition on product innovation and performance in local versus traded markets, with empirical evidence from the performing arts sector. Local markets feature locally produced and consumed offerings and consistent patterns of competitive density. Traded markets feature non-local economic exchanges that create revenue flows from one geographic market to another and divergent levels of competitive density. High levels of competitive density create intense rivalry in the local market, which fosters product innovation and success in traded markets. By explicitly accounting for these countervailing effects, conceptually and empirically, this study offers fresh insights into equivocal findings regarding the effects of competitive concentration. The results offer compelling evidence that competitive density in the performing arts has a positive effect on product innovation, an increasingly positive effect on traded market performance, and negative effects on local market performance attributable to competitive rivalry.