In _____ market, the threat of entry generally forces a firm to behave in a competitive manner.

Question

Quizplus · Accepted Answer

In a contestable market, the threat of potential entry by new competitors forces existing firms to behave competitively, often leading to lower prices and higher quality services to deter new entrants. This is because the market is accessible and has low barriers to entry and exit, making it easy for new firms to challenge incumbents.

In _____ Market, the Threat of Entry Generally Forces a Firm