4.1.5.9 Contestable and non-contestable markets
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5 Terms
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contestable market
occurs when there is freedom of entry and exit into the market
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low sunk costs, existing firms always face threat of new firms, threat of entry is sufficient to keep prices competitive
Features of a contestable market
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sunk costs
an irretrievable cost. Once spent, this cannot be recovered when the firm leaves the industry.
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entry, competitive equilibrium, profit
In a contestable market, the threat of ____ is sufficient to keep prices to a close ________ _________ and _____ low — otherwise, new firms enter.
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high contestability
In a contestable market, low barriers to entry means:
Note 
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