In a monopolistically competitive market with Dixit-Stiglitz preferences, the number of firms in the differentiated product market falls as goods in that market become less substitutable.

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In a monopolistically competitive market with Dixit-Stiglitz preferences, as goods become less substitutable (i.e., more differentiated), the market can sustain a larger number of firms because each firm faces less direct competition from the others, allowing more firms to profitably operate.

In a Monopolistically Competitive Market with Dixit-Stiglitz Preferences, the Number