In a contestable market, an incumbent firm may not want to deter a rival's entry if the incumbent firm prices so ____ that it would be worse off than if it:

Question

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In a contestable market, if an incumbent firm prices so low that it would be worse off than if it shared the market, it may not want to deter a rival's entry. This is because sharing the market at a higher price could be more profitable than maintaining a monopoly at a very low price.

In a Contestable Market, an Incumbent Firm May Not Want