Which is NOT a factor that increases the contestability of markets?
A) Fixed costs of market entry are low, relative to potential revenue.
B) The incumbent has no unique, hard-to-replicate resource.
C) Consumers are not open to the prospect of dealing with a new competitor.
D) There are few or no legal barriers to entry.

Question

Quizplus · Accepted Answer

Consumers not being open to dealing with a new competitor is not a factor that increases the contestability of markets. In fact, it could potentially decrease contestability if consumers are loyal to the incumbent and not willing to switch to a new entrant. A, B, and D are all factors that increase contestability by lowering barriers to entry and making it easier for new firms to compete with incumbents.

Which Is NOT a Factor That Increases the Contestability of Markets