to investment banking for commercial banks (Pugel and White, 1985). Banking deregulation in the United States in the 1980s weakened this legal barrier; however, it still remains in place (Standard & Poor's, 1990).
Barriers to exit refer to the costs which would be incurred by a firm, should that firm decide to stop participating in a given market. Thus, a market in which participating firms (1) are required to make a high cost investment in equipment and/or facilities, and (2) where such equipment and/or facilities may not (a) be easily transferable by a firm to use for other purposes, or (b) quickly sold
without significant loss may be said to be characterized by barriers to exit.
Market contestability is defined primarily in the context of ease of exit, and ease of exit is directly related to the barriers to exit character of a market (Baxter, 1986). When a firm can leave an industry, or market, at little or no cost to the firm, the market is said to be contestable.
As an example, the airline industry one whi
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