Market size, cultural discount and investment decisions of cultural industries

Market size and cultural discount are the two important factors influencing the investment of enterprises in cultural industries. This present paper constructs a model to study the specific influences of these two factors on the investment decisions of cultural enterprises. It is proved that the market size exerts influence on the pursuit of maximizing their profits of enterprises while cultural discount will effect on the size of foreign market occupied by enterprises. The bigger the market at home is, the less constraint of overseas market enterprises will be subject to; therefore, they will not lower their price at a great extent and at this time, the cultural discount rate is very low and they are capable of making abundant profits at home. On the other hand, if the market at home is very small, the enterprises will be forced to lower their prices so as to enlarge their market shares and at this time the cultural discount rate is rather high.