As in the cases of both perfect competition and pure monopoly, the monopolistica

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As in the cases of both perfect competition and pure monopoly, the monopolistically competitive firm maximizes its profits at the level of output for which MR=MC In equilibrium the firm will produce at a point where P=MC, thus resulting in the right amount (i.e.. the most efficient allocation of resources) of the product being produced Monopolistically competitive firms have been of significant concern to economic policy makers in government This is indicated by indicated by the large number of antitrust policies that have recently been brought against firms in such industries The oligopolistic firm is more difficult to model than the purely competitive firm, the pure monopolist, or the monopolistically competitive firm That's because there is another variable that affects the decisions of the oligopolist that we didn't have to consider in any of the other market models - "mutual interdependence " Oligopolist industries can be the result of "barriers to entry." That is, the large capital expenditures required to make the firm an economy of scale could be prohibitive to many potential competitors. Mergers tend to make industries more competitive. A "limit pricing" strategy is designed to promote entry into the industry by potential competitors

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