Contestable markets are often characterized by low barriers to entry and exit. This means that it is relatively easy for firms to start up and to shut down operations. It also means that firms have access to the same technologies and resources as their competitors.

Contestability is important because it can lead to lower prices and higher quality goods and services. When firms know that they could be easily replaced by new entrants, they have an incentive to keep prices low and to offer high-quality products.

However, contestability is not always a good thing. In some cases, it can lead to instability in the market, as firms constantly try to undercut each other's prices. It can also lead to a decrease in innovation, as firms focus on keeping costs down rather than developing new products and services.

Overall, contestability is a complex concept with both positive and negative effects. It is important to consider all of the potential effects of contestability before deciding whether or not it is a good thing for a particular market.