Final answer:
In a Stackelberg oligopoly, a leader firm chooses output first, barriers to entry are high, and firms produce homogeneous or differentiated products. The incorrect condition is the market being contestable, as this implies no barriers to entry.
Step-by-step explanation:
An important characteristic of a Stackelberg oligopoly is the presence of high barriers to entry that prevent other firms from entering the market easily. This type of market is named after Heinrich von Stackelberg and is defined by a hierarchical structure where a single firm (the leader) sets output levels before other firms (followers) in the industry make their output decisions. Firms produce either homogeneous or differentiated products and make strategic decisions based on the actions of other market participants.
The statement that the market is contestable is not a condition for a Stackelberg oligopoly. A contestable market is one with no barriers to entry or exit, which is contrary to the nature of oligopolistic markets that have significant barriers to entry.