Th3.4: Contestability Flashcards
1
Q
What is this model concerned with?
A
the possibility of other firms entering the market if they see the opportunity to make money, rather than the number of firms in the industry at a point in time
2
Q
What is a contestable market?
A
one with a high threat of new entrants, which keeps firm producing at a competitive level
3
Q
Even in a monopoly, why might a firm be forced to be efficient?
A
due to the potential of new entrants to the market
4
Q
Any attempt to make a huge profit will…
A
will mean other businesses will be attracted to the industry
