Cinema Industry

Question 1

Oligopoly Definition

Answer 1

A market structure which is dominated by a few large firms, leading to a high level of market concentration.

Question 2

Why Cinema is an Oligopoly

Answer 2

Three firm dominance Cineworld, Vue and Odeon, controlling 60%.

Question 3

How Cinema’s operate

Answer 3

They are interdependent, having to consider the actions of their rivals leading to price rigidity.

Question 4

Kinked Demand Curve Assumption

Answer 4

There is a stable profit maximising equilibrium price, cinema industry with the similar pricing structure

Question 5

Kinked Demand Curve

Answer 5

Interdependent - ↑ price, unlikely to follow ↓ customers ↓ profit. Elasticity explanation+diagram. Price war explain, if reduce/less customers increase. Conform to rigidity

Question 6

Kinked Demand Curve Elasticity

Answer 6

Elastic - ↑ price people unwilling to pay extra leading to ↓ customers.
Inelastic - ↑ customers, as pricing is ↓ than rivals more likely to switch to ↓ price.

Question 7

Non Price Competition

Answer 7

Cannot compete on price marketing techniques, example important - Two for One ect.

Question 8

Film Distributors

Answer 8

Decide access to films, price they want achieved by vast EofS by big cinemas, barrier to entry on small cinemas maintaining their oligopoly status.

Question 9

Low Barriers to Entry?

Answer 9

40% of industry not Odeon/Vue/Cineworld. Oligopoly high barriers to entry, few new additions, many independent cinemas, monopolistic competition instead, allowing new entrants.

Question 10

Monopoly?

Answer 10

Some areas may only have access to one cinema, excluding competition, oligopoly has limited competition, but monopoly has none.