Contestable markets are characterized by low barriers to entry and exit, which means that firms can easily enter and exit the market. This can lead to hit-and-run competition, as firms can enter the market quickly, sell their product, and then leave just as quickly. This is because the sunk costs are low.

Examples of contestable markets include the taxi industry, where anyone with a car can become a taxi driver in an unlicensed market and the market for consulting services, where new firms can easily enter the market and offer their services.

A pop-up store that only operates for a limited time in a specific location. The store owner can enter the market quickly, sell products to customers, and then exit the market once the store's lease is up.