Beside studying the determinants of investments in the Brazilian movie theater industry I also examine if the recent expansion of the sector in terms of the number of theaters was due to the adoption of segmentation strategies and restrictive practices by the agents of the market, which would eventually be responsible for its geographic concentration increase. It is then used the concept of entry threshold developed by Bresnahan and Reiss (1991) to examine the extent to which competitive conditions change in independent local markets when the number of firms increases. With data for the Brazilian movie theaters in 2007, I adopt a unique econometric approach in the literature of entry models using a zero-inflated ordered response model to estimate the entry thresholds and the equilibrium market size. The results suggest that barriers of entry are significant for the entry of a second firm in monopolistic markets indicating that the profitability associated with the recent expansion of the sector was based on harmful strategies to competition at the local market level.
