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Contestable markets are characterized by "hit and run" competition; if a firm in a contestable market raises its prices so as to begin to earn excess profits, potential rivals will enter the market, hoping to exploit the high price for easy profit. When the original incumbent firm(s) respond by returning prices to levels consistent with normal ...
As markets tanked on Monday morning, the potential consequences of a North American trade war were laid bare. The potential for tariffs to spike the grocery prices that Trump was partly elected to ...
According to the theory of contestable markets, if few enough firms are in the industry so that one would expect positive economic profits, the prospect of other firms entering the market may cause firms in the industry to set prices as if those other firms were already in the market; thus actual entry by those firms is not necessary for the ...
Profit can, however, occur in competitive and contestable markets in the short run, as firms jostle for market position. Once risk is accounted for, long-lasting economic profit in a competitive market is thus viewed as the result of constant cost-cutting and performance improvement ahead of industry competitors, allowing costs to be below the ...
Bird flu is forcing farmers to slaughter millions of chickens a month, pushing U.S. egg prices to more than double their cost in the summer of 2023. While it is fatal to a variety of animals ...
A U.S. debt default would likely have severe consequences, roiling global financial markets and plunging the country into a recession. Sometimes Congress raises the debt ceiling quietly, and ...
In 1982 paper [30] Baumol defined a contestable market as a market where "entry is absolutely free and exit absolutely costless", freedom of entry in Stigler sense: the incumbent has no cost discrimination against entrants. He states that a contestable market will never have an economic profit greater than zero when in equilibrium and the ...
SoftBank billionaire Masayoshi Son has pledged to invest $100 billion in the US over the next four years. Masa's longtime friend and Yahoo co-founder Jerry Yang weighs in on the pledge.