1. Leisure Markets

2. There are four leisure markets which need to be
considered in F583
 Spectator sports (which usually means football)
 Holidays and travel (a very broad category)
 Cinemas
 Broadcasting

3. The main skills needed in the examination for
each of these will be:
 To be able to recall some key data and recent trends (L2)
 To place them into a market structure using the characteristics (L3)
 Use the market structure to explain their behaviour and efficiency (L3)
 Evaluation the market structure (L4)
 Assess the level of contestability (L4)

4. Market structures recap
 Perfect competition characteristics
 Perfect knowledge and mobility
 No barriers to entry
 Homogenous products
 Must accept market price for all goods
 Perfect competition implications
 Horizontal AR/MR curve (all goods sold at the same price)
 Productively and allocatively efficient
 Unlikely to be dynamically efficient
 Cannot make abnormal profits

5. Market structures recap
 Monopolistic Competition characteristics
 Differentiated goods
 Low barriers to entry
 Many, small firms
 Limited price setting power
 Monopolistic Competition implications
 Gently sloped AR/MR curves (elastic because of alternatives)
 Profits in SR only
 Not efficient

6. Market Structures recap
 Oligopoly characteristics
 Few firms
 Interdependence (what one does
affects the others)
 May be competitive or collusive
 Non-price competition is dominant
 Barriers to entry (often loyalty)
 Oligopoly implications
 Profits depend on level of
competition
 Unlikely to be efficient
 Potential for dynamic efficiency
 Price stability

7. Market Structures recap
 Monopoly characteristics
 One firm (or one with more than 25%)
 High barriers to entry (often legal)
 Significant price setting power (may only be
limited by government)
 Monopoly implications
 Depend on attitude of firm
 May or may not be dynamically efficient
 May or may not exploit the consumers
 Likely to benefit from economies of scale
(natural monopoly)
 Profitable in short and long run

8. Placing the Leisure Markets
 The importance of perspective
 What are we considering to be the market?
 Spectator Sports – All football teams (including local ones) or only the
Premiership? Are we considering all Premiership teams or only those
which are comparable?
 Holidays and Travel – so many options
• Hotels – Chains? All-inclusive? Local?
• Flights – Airlines generally? Specific routes/airports? Business/Pleasure?
• Holidays – Independently booked? Travel agents? Package holidays?
 Cinemas – all cinemas? In a particular location?
 Broadcasting – All freeview channels? Sky? Online? Are we considering
mass market channels only?

9. Sports
Travel
Cinema
Broadcasting
All cinemas
within a city
All channels
including the
small, random
ones on
Freeview/Sky
Travel agents
Monopolistic
Competition
All sports
teams
including local
and minor
leagues
Airline industry
generally
Hotels
generally
Package
Holidays
(Thomas Cook,
TUI own more
than 40%)
Oligopoly
Premiership,
especially the
“big brand”
Large, out-of
teams (Man U,
town cinemas
Flights on a
Chelsea,
(multiplex)
particular route
Arsenal, Man C,
Liverpool)
Large, chain
hotels within a
city
Large massmarket
channels
(BBC1, BBC2,
Channel 4, ITV,
Channel 5)
Service
providers (BBC,
ITV, Channel 4,
Sky)

10. Trends and other notable items
 Sports

Lack of focus on profits (almost like a hobby), not like a ‘normal’ business

Increasing ticket prices

Massive brand loyalty
 Holidays

Growth of internet making things more competitive

Increase in holidays to long-haul destinations

More holidays than ever before but this also means growth in ‘staycations’ and package holidays
 Cinemas

Move to multiplexes & backlash against multiplexes

Introduction of new differentiators e.g. alcohol, 3D, IMAX

Much smaller audiences than historic amounts but a revival in last few years. Sustainable?
 Broadcasting

Much more competitive than it used to be

Easy technology and ability to broadcast online at low cost

Impact of SMART TV, iPLayer, TiVO, mobile?

11. Homework
 From the January 2012 Paper
3a) Analyse, using diagrams, the difference between the short run and
long run equilibrium of a firm in monopolistic competition. (15)
3b) Discuss, using a leisure industry of your choice, the extent to which
it is monopololistically competitive. (20)