Economics · Contestable Markets
Consider the following statements regarding contestable market theory: Assertion (I): A market is perfectly contestable if entry into it and exit from it are costless. Assertion (II): In contestable markets, even large oligopolistic firms end up behaving like perfectly competitive firms. Which of the options is correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Only (II) is correct
- 2Only (I) is correct
- 3Both (I) and (II) are correct✓
- 4Both (I) and (II) are incorrect
Correct answer
Both (I) and (II) are correct
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