Chamberlin used the term “monopolistic competition” to describe firms pursuing a product differentiation strategy in a competitive industry. However, it is usually the case that firms that operate in...

Chamberlin used the term “monopolistic competition” to describe firms pursuing a product differentiation strategy in a competitive industry. However, it is usually the case that firms that operate in monopolies are less efficient and less competitive than those that operate in more competitive settings (see Chapter 3). Why would this same problem exist for firms operating in a “monopolistic competition” context?