3.4.7 - Contestability

• Contestable market is when there is the threat of new entrants into the market, forcing firms to be efficient
• There will be low product loyalty , meaning people don’t consistently use one brand and are happy to switch if a new one enters the market
• A contestable market is simply a market with low barriers to entry and exit and most importantly, it doesn't matter how many firms are in the market
• A market that isn't contestable will have high barriers to entry like the airline market.