According to contestable market theory:
A) barriers to entry are much more important than market structure in determining the degree of price competition in an industry.
B) barriers to entry are much less important than market structure in determining the degree of price competition in an industry.
C) barriers to entry and market structure are both important in determining the degree of price competition in an industry.
D) neither barriers to entry nor market structure affects the degree of price competition in an industry.

Question

Quizplus · Accepted Answer

Contestable market theory emphasizes that the threat of potential entry by new competitors can lead to competitive pricing and behavior, making barriers to entry more crucial than the existing market structure.

According to Contestable Market Theory