The contestable market model is the oligopoly model which results in
A) the greatest efficiency.
B) the greatest inefficiency.
C) the highest profits.
D) the greatest deadweight loss.

Question

Quizplus · Accepted Answer

The contestable market model suggests that even in a market with a few firms (an oligopoly), the potential for new entrants to come into the market can lead to outcomes similar to perfect competition, resulting in greater efficiency. This is because the threat of new entrants forces existing firms to behave more competitively, keeping prices closer to marginal cost.

The Contestable Market Model Is the Oligopoly Model Which Results