Question

What happens in the long run for the monopolistic competition firm and for the oligopoly firm? Which of the two are better for the consumer and why?

Answer 1

Monopolistic Competition- it can actually be mentioned that in the long run monopolistic competitions, many new firms get to enter the market this is because the short run profits gets to attract the firms to enter the market and this can get to result in zero profit in the long run.

Oligopoly -however in a market like oligopoly, firms can also get to retain profit in this is because of the fact that their high barriers to entry in the oligopoly and that makes the reason why oligopoly can get to retain profits even in the long run.

From the customer point of view, monopolistic competition get to produce a quantity which is near to the efficient level of output and this is because of the competition prevailing in the market of monopolistic world and it is nearer to the efficient level of output when compared to that of an oligopoly and that is the reason why in the long run monopolistic competition is better for the customer.