Contestability

Question 1

Contestability

Answer 1

All about the threat of competition
Describes markets, doesn’t define them
Very contestable markets have high threats of competition e.g. ice cream market in summer

Question 2

Conditions / assumptions

Answer 2

High potential for new firms in the market
Low brand loyalty - high consumer churn
Low barriers to entry and exit
Equal access to technology

Question 3

Hit and run competition

Answer 3

When a business enters an industry to take advantage of temporarily high SNP before leaving the market due to low sunk costs