What are the characteristics of a contestable firm

Answer: see explanation below for answer.

Explanation: A contestable market refers to a market in which firms are facing zero entry and exit costs. What his means is that there are little or no barriers to entry and to exit, for example, sunk costs and contractual agreements. In order for a market to be perfectly contestable, the technology that is vital in a particular industry must be readily available to new firms seeking to enter the market.

The characteristics of contestable firms include:

1. They encounter no barriers to their entry or exit.

2. They do not incur no sunk costs.

3. New and old firms have access to the same level of technology in the industry.