Other Economists Have Argued That the Allocative Inefficiency of Competitive

Other economists have argued that the allocative inefficiency of competitive price searchers apparent in mechanical models is misleading. They argue that such mechanical models fail to account for

A) the entry and exit of firms in the long run, which drives economic profits to zero, thereby eliminating any short-run, allocative inefficiencies in competitive price-searcher industries.
B) the possibility that the higher prices paid by consumers in competitive price-searcher industries are compensated by greater choice of goods or locations than would be present in an allocatively "efficient" industry.
C) the spillover effects on the advertising industry, which would shrink substantially if competitive price searchers did not need to advertise so much.
D) the fact that most competitive price-searcher industries are contestable markets, so competitive price searchers react to competitive pressures whether or not numerous competitors actually operate in the market.