Is monopolistic competition good for society Can policy advi

Is monopolistic competition good for society?

Can policy advisors improve market outcomes?

Solution

Monopolistic competition comprise of large number of seller that swlls differentiated goods. Goods sold in the marekt are close substitute. Thus consumer gets a wide range of goods to choose from which is positive side from the consumer. Monopolist means there is a monopoly of a firm for certain goid but there will be strong rivalry among the firms which produces substitue good.

However monopolistic market leads to dead weight loss which is a negative impact of monopolistc.

Thus Monopolistic competition cannot be said as bad.

Yes policy makers can improve market outcome by provisioning the market and by making sure that monopolistic outcome is equal to perfect competition output.