Which of the following does NOT intensify competitive pressures associated with the threat of entry?

The reasoning behind selecting the option stating that incumbent firms are unable to contest newcomers is that competitive pressures are generally intensified when existing firms actively respond to potential entrants in the market. When incumbents are unable to contest newcomers, the barriers to entry may seem less daunting to potential entrants, potentially leading to increased competition. This lack of contestability makes the market appear more inviting and can encourage new players to enter, thereby heightening competitive pressures rather than alleviating them.

In contrast, when incumbent firms are struggling to earn profits, facing low entry barriers alongside growing buyer demand, or lacking diverse product offerings, these conditions tend to create an environment that encourages new entrants, intensifying competitive pressure in the market. Therefore, the inability of existing firms to contest newcomers is unique in that it does not contribute to intensifying competition significantly, making it the correct answer to the question.