When the market for a network good is contestable, then:
A) there is little competition.
B) many firms operate and compete for consumers in the industry.
C) it is hard for consumers to get locked into a bad outcome.
D) monopoly firms always charge prices well above their average costs.

Question

Quizplus · Accepted Answer

In a contestable market, the threat of potential competition ensures that firms cannot lock consumers into bad outcomes, as new entrants can easily enter the market and offer better alternatives.

When the Market for a Network Good Is Contestable, Then