The product-variety externality associated with monopolistic competition arises because in monopolistically competitive markets firms try to mimic the success of other brands and products.

Question

Quizplus · Accepted Answer

The product-variety externality in monopolistic competition arises because each firm offers a unique product variation, increasing the diversity of products available to consumers, not because firms mimic each other.

The Product-Variety Externality Associated with Monopolistic Competition Arises Because in Monopolistically