The economic inefficiency in an oligopoly may be reduced by the following, except

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Quizplus · Accepted Answer

Aggressive advertising by rivals may actually increase inefficiency in an oligopoly by leading to a "spending war" between firms and diverting resources away from productive investments such as research and development. The other options, increased competition from foreign producers, limit pricing due to potential entrants, and economic profits used to fund technological advance, may all contribute to reducing economic inefficiency in an oligopoly.

The Economic Inefficiency in an Oligopoly May Be Reduced by the Following