What is a market called that is perceived as an oligopoly or monopoly, but can act competitively due to potential entrants?

A market that is perceived as an oligopoly or monopoly but can act competitively due to potential entrants is referred to as a contestable market. This concept revolves around the idea that even if a market is dominated by a few firms (as in an oligopoly) or a single firm (as in a monopoly), the presence of potential competition can drive existing firms to behave more competitively.

In a contestable market, the threat of new entrants is significant because if existing firms set prices too high or engage in practices that limit competition, new firms can enter the market without facing substantial barriers. The entry and exit of firms are relatively easy, which creates an incentive for incumbent firms to maintain prices at competitive levels to deter entry. Thus, the competitive pressure from potential entrants leads to outcomes that are similar to those found in a fully competitive market, even if the actual number of firms is limited.

The other options are not focused on the entrance of potential competitors. A monopolistic market typically describes a situation with only one seller, lacking the dynamics introduced by the threat of new entrants. A sealed market and a competitive market do not encapsulate the unique dynamics of how potential competition influences the behavior of existing firms in oligopolistic or monopolistic settings.