The fact that monopolistically competitive firms charge a price that exceeds marginal cost is responsible for the

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The business-stealing externality in monopolistically competitive markets arises because firms charge a price above marginal cost, leading to inefficiencies as they attract customers from competitors without necessarily increasing overall market efficiency. This is distinct from product-variety externalities and does not relate to long-term losses or the persistence of positive profits.

The Fact That Monopolistically Competitive Firms Charge a Price That