In monopolistic competition,the entry of new firms

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In monopolistic competition, the entry of new firms increases the number of competitors and thus reduces the market share of existing firms. This leads to a leftward shift in the demand curve faced by each existing firm as consumers have more options and are less likely to purchase from them. The entry of new firms can also lead to price competition, further reducing the market power of existing firms.

In Monopolistic Competition,the Entry of New Firms