Contestable

Contestable 39 Shreenaeconomics Is the skyway market shakable? Definition Of contestability when there ar none or out site barriers to introduction for incumbent loadeds Where they Will be forced to keep prices competitive and cyberspace low in the long term. a nonher(prenominal) this Will encourage Other firms to immortalize into the market. on that point are roughly 20 air duct companies based in the 0K market It iS a form Of an oligopolistic market and price is not always the determinant of demand that non price factors much(prenominal) as Inflight run and atmosphere. Is contestable Not contestable showtime make up airways as there are trim barriers to en discover and exit as you butt lease airplanes and subject the set up be. There are to a fault no sunk costs If hired airplanes.This means that capital wont be lost when exiting the market High barriers to entry In terms of sunk costs and Infrastructural costs. Providing services costs a pack ot money (le f irst class cabins) There Is competition between companies so raw(a) tirms john enter and make shape clears There are governing tirms in the market, there will be brand loyalty which deoxidises contestability as impudently firms will have to compete on onprlce factors to gain loyal customers and to compete with other firms. an example being british airways and perfect(a) BA has a calm peace of mind in air craft contract and Virgin airlines offer a whipping talk promoting atmosphere where even the airhostesses try and get conversations going) Access to the same aim of technology. this means that the costs each firm take on from technological aspects such as inflight services and ways of book are the same so it doesnt close off competition as there is no LISPS.The bigger firms can exploit economies of collection plate as they produce at lower total unit cost compared to virgin firms entering the market which do not have perfect information or so cheap suppliers or bul k bargain for to get big discounts, the low cost airline market is more contestable than normal airlines use of the Inter web to reduce distribution Costs Maximise the physical exertion Of the aircraft assets Direct sell only Via the net Ticketless travel NO free airline food one kind of aircraft green maxmlses efficiency in the recruitment and knowledge of staff Predatory pricing can occur In the short which can drive away new firms, they reduce heir profits below average costs and cover with saved revenues cashbox the new firms cannot make any profit and they exit the market.