4.7 Contestability Flashcards
1
Q
Characteristics of contestable markets?
A
- Low barriers to entry
- Large number of firms
- Low loyalty
2
Q
Impact on firm behaviour?
A
Less profit maximisation
3
Q
KEY POINT
A
The mere threat of competition affects behaviour
- SN profit is vulnerable to “hit and run”
4
Q
Types of barriers?
A
- Economies of scale
- Sunk costs
- Brand loyalty
- Vertical integration
