contestable market

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contestable market

a MARKET where new entrants face costs similar to those of established firms and where, on leaving, firms are able to recoup their capital costs, less depreciation. Consequently, it is not possible for established firms to earn ABOVE NORMAL PROFIT as this will be eroded by the entry of new firms, or, alternatively, the mere threat of such new entry may be sufficient to ensure that established firms set prices that yield them only a NORMAL PROFIT return. Perfectly competitive markets (see PERFECT COMPETITION) are all contestable, but even some oligopolistic markets (see OLIGOPOLY) may be contestable if entry and exit are easily affected.

In recent times many markets have been opened up by a number of developments, including increasing international competition as trade barriers have been reduced, the introduction of FLEXIBLE MANUFACTURING SYSTEMS and ECOMMERCE trading on the INTERNET. See WORKABLE COMPETITION, CONDITION OF ENTRY, BARRIERS TO ENTRY, BARRIERS TO EXIT.

References in periodicals archive ?
This process is going on in many sectors right now and what's important to be aware of is that, where the innovation process is limited by the selection of which firms are going to compete, it will also lead to a reduction in the space for experimentation and contestability generally and, to me, this explains the paradox that there are a lot of exciting new technologies developed but we can't actually see the effect in any type of economic statistics.
Policy documents informing Australian wheat industry policy share this interpretation, viewing competition in terms of the contestability of the market, rather than the number of firms in that market.
There are several concerns being sorted out yet in the Contestability Rules for the Retail Electricity Market, primarily on the mandatory migration of contestable customers.
In summary, contestability of two-sided content markets cannot be as clearly dismissed as for infrastructure markets and may indeed be viable.
For this reason, it is imperative that a whistleblower's right of contestability be protected from any form or even appearance of retaliation.
Port, contestability, North America, shipping alliance, liner shipping, shipping capacity
While it should be left to empirical analysis whether a given inscription device is in fact successful, the idea of the contestability differential leads to a productive analytical question: How might it be possible for a given inscription device to align itself with elements in a whole configuration of social forces so that it maximizes its contestability differential vis-a-vis the practices it describes, measures and evaluates?
Without a more elaborate understanding of the meaning of such a framework, essential contestability can lead a political philosopher to accept a kind of skepticism or even political nihilism.
This kind of weirdness could drive every dispute the industry has ever had in relation to contestability, pre-existing conditions, exclusions and even the hassles of underwriting.
In developing the contestability approach, William Baumol and others stressed that there is no tradeoff between economies of scale and competitiveness of industries.
A new historiography should recover the diversity, contingency, and contestability of socialist ideas and the movements they inspired" (313).
To that end, the state's role in enhancing banking competition is through designing policies that guarantee market contestability through healthy entry of well- capitalised institutions and timely exit of insolvent ones and by creating a market-friendly informational and institutional framework.