contestable market

In economics, a "contestable market" is one where the threat of new firms entering the market keeps existing firms competitive, even if there are few actual competitors. The key characteristic is that it is easy for new businesses to enter and exit the market.1

Barriers to entry, such as high costs, established brand loyalty, or government regulations, make it difficult for new firms to compete. In contestable markets, these barriers are low, meaning that if an existing firm charges excessively high prices or offers poor quality, new competitors can easily enter and offer better alternatives. This potential for competition, rather than the number of firms present, is what drives efficiency and fair pricing.21