The ability to challenge or compete, specifically regarding a contract for goods or services in the UK. Contestability is integral to NHS policy, and central to ensuring fair competition within the market for NHS funded services.
The Contestable Market Theory framework proposes that a potential competitor can use any strategy, even the short-run possibility of profit gain, because he can enter the market and gain profit before prices have changed, and leave the industry having no costs.
(8) The first half of this article focuses on the inapplicability of the "contestable markets theory," which animates (at least implicitly) the Trinko opinion, to important segments of the electricity industry, such as transmission and generation.
To reinforce the criticism of natural-monopoly arguments, Grossman presents a review of theory that is titled "Is Anything Naturally a Monopoly?" The review covers much ground--traditional textbook analyses, the contestable market approach of Baumol, Panzer, and Willig, the application of Coase's classic 1937 article on the extent of the firm, the relevance to electric power, and the history of the concept.