Answer to Question #125560 in Economics for Kurhula

Question

Two firms dominate the cinema industry in South Africa: Ster‐Kinekor and Nu Metro. Although
these firms essentially offer a homogeneous product, each firm attempts to differentiate itself in the eyes of customers.

Q.2.1 Identify the type of market/industry structure that is applicable to the cinema
industry in South Africa. Justify your answer by referring to the main characteristics
of this market structure.
Q.2.2 Explain the concept of non‐price competition in the context of the cinema industry
using examples to illustrate your answer.
Q.2.3 Government may prevent possible abuse of market power by these firms within the
industry. How would the government achieve this?

Answer 1

2.1 The cinema industry is an​​entertainment, because the film industry sells services (a place to watch and watch a movie on a large screen) related to the entertainment of people.

2.2 People get benefit which does not relate with prices. For example: buy 2 tickets and get third for free.

2.3 Government can: fix a prices on tickets, subsidize small cinemas and create the competition, give benefits to various segments of the population.