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Competitive Advantage Pursued by Monopolistic Competition Firms

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I contend that the competitive advantage pursued by monopolistic competition firms through various forms of marketing programs is usually not sustainable and that beyond short term profits and losses the economic profit is zero. How does the cost of such marketing programs affect the ATC curve and the consumer? How does it affect the output level? Is it a case of economic waste to society?

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This posting explores competitive adantage pursued by monopolistic competition firms.

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Because there are no barriers to entry into this type of industry a firm will not be expected to make economic profits in the long run. If (for a short while) a firm is making economic profits, then other firms would quickly enter this industry in order to share in the profits. The profitable firm's sales would suffer and ...

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