in the long run equilibrium, monopolistic competition results in some deadweight loss because of fewer trades compared to perfect competition, and we also donât see productive efficiency due to slightly higher costs. despite this, why might monopolistic competition still be desirable compared to perfect competition?
When consumers are forced to spend more money on goods, the economy will be stimulated
In monopolistic competition, firms have to fight harder for unique products and marker share, and this will result in better products and supports the advertising industry
The higher costs of monopolistic competition are likely the result of product differentiation, and consumers may prefer to have variety and choice and willing to pay for it
Entry barries in monopolistic competition can be created by existing firms as a way to keep inferior products out of the market