A contestable market has few competitors but a high threat of entry, ensuring competitiveness and avoiding monopoly. Criteria for a high threat of entry include low sunk costs, equal access to technology, and free access to customers. In a contestable market, prices can be set by producers, and size is irrelevant. However, profitability can lead […]

A contestable market has few competitors but a high threat of entry, promoting competition and preventing monopolies. Criteria for a strong entry threat include minimal sunk costs, equal access to technology, and free access to customers. Prices can be set by manufacturers, and the size of firms is irrelevant. Profitability and the potential for oligopolies […]