A market where there is a threat of competition, not necessarily actual competition, but the threat could be enough to affect the behavior of firms in the market
Technology has increased the contestability of markets by reducing barriers to entry and exit, allowing for greater innovation and disruption, and improving information
The monopolist will move to the limit price (where average cost equals average revenue) to eliminate the threat of entry and competition, even though they could charge a higher monopoly price
The length of contestability, the role of technology, and the role of regulation are important factors to consider when evaluating the pros and cons of contestable markets