Product innovation and contestability

Arjen van Witteloostuijn*

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review


This article deals with the introduction of product innovation in a contestable market model. Investment contestability describes a benchmark case of competition by introducing sunk entry-deterring investment in a free entry framework. Aside from careful price setting, suppliers adopt investment in product quality in order to deter entry. Zero-profit pricing and increased quality point to a partial second-best outcome of market behaviour.

Original languageEnglish
Pages (from-to)181-196
Number of pages16
JournalDe Economist
Issue number2
Publication statusPublished - 1 Jun 1990


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