Question

The contestable market model has important policy implications. if there is concern that a market is not sufficiently competitive, what can policymakers do to increase competition in a given industry? check all that apply.

Answer 1

If there is concern that a market is not sufficiently competitive, then policymakers can look at the barriers existence at the entry levels and what are the steps to be taken to make contestable market. Controlling markets delays entry is the major argument by many economists. So decreasing the entry barriers can only be possible by not regulating the markets which will lead to lower prices.