top executives, go through episodes of cooperation and competition. If oligopolies could sustain cooperation

with each other on output and pricing, they could earn profits as if they were a single monopoly. However, each

firm in an oligopoly has an incentive to produce more and grab a bigger share of the overall market; when

firms start behaving in this way, the market outcome in terms of prices and quantity can be similar to that of a

highly competitive market.

Tradeoffs of Imperfect Competition

Monopolistic competition is probably the single most common market structure in the U.S. economy. It

provides powerful incentives for innovation, as firms seek to earn profits in the short run, while entry assures

that firms do not earn economic profits in the long run. However, monopolistically competitive firms do not

produce at the lowest point on their average cost curves. In addition, the endless search to impress consumers
{"producer": "Prince 14.2 (www.princexml.com)", "total_pages": 597, "creator": "PDFMiner", "file_name": "Microeconomics3e.pdf", "batch_upload": true, "upload_timestamp": "2026-02-07T15:24:38.309401", "title": "Principles of Microeconomics 3e", "moddate": "2022-12-07T14:23:05-06:00", "creationdate": "2022-12-07T14:15:44-06:00", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_type": ".pdf", "file_size_mb": 26.99, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "uploaded_via": "batch_uploader"}