What is the deadweight loss of monopolistic competition offset, in part, by?

Question

Quizplus · Accepted Answer

The deadweight loss of monopolistic competition is caused by the fact that these firms produce at a point where the marginal cost is less than the marginal revenue, resulting in a higher price and lower quantity than would be efficient. However, product differentiation can offset some of this deadweight loss by allowing firms to charge higher prices for their unique products, which can increase their revenue and potentially allow them to invest in research and development, leading to potentially improved products and productivity. Productive efficiency and allocative efficiency are not directly related to the deadweight loss of monopolistic competition offset.

What Is the Deadweight Loss of Monopolistic Competition Offset, in Part