What makes a market contestable?
What makes a market contestable?
A contestable market has low barriers to entry and exit and low sunk costs. These conditions create a credible threat of hit-and-run competition, which can pressure incumbent firms to lower prices, limit profits and control costs.
Step-by-step lessons on AQA A Level Economics 1.5.9 Contestable and non-contestable markets (A-level only). Each one builds up to exam-style questions. Start with the core supply-and-demand models before moving on to the more evaluation-heavy macroeconomic policy topics.