Contestability

Contestability in market economics

Market contestability refers to the ease with which new firms can enter and leave a market. A perfectly contestable market is one with no entry or exit costs. Barriers to entry and exit reduce the degree of contestability.

• More on contestability

Assessing a market’s contestability may assist regulators in deciding whether a market should be ‘opened up’ to allow new firms access to a market.

• Contestability and natural monopolies