what measures can be done to reduce efficiency of monopolistic competitive market structures?

Answer 1

Let them burn out the weaker competitors until it ceases to be monopolistic competition.

First, monopolistic competition is NOT efficient. Firms are trying to sell as if they had monopolistic marginal advantage in order to undercut competitors. They often are selling at a loss and the competitive environment becomes one of attrition, weaker and less capitalized firms fold. When competitors dwindle and the unprofitable nature of the market drives capital away, then monopoly or oligarchic market structure is formed. With the competition pared to a minimum then profits rise and firms become interested in a share and enter the market. Too much, unrestrained, may then lead to the hyper-competitive monopolistic competition and the market has yet another round of dog-eat-dog.

Reducing the "efficiency" of that dynamic is done two ways: (1) they fight it out until enough firms fail, and (2) governmental limits or controls aspects of the marketplace. In the latter, it could control marketplace entry by licensing firms and limiting the number or scope of licenses. Related are regulatory pressures that enforce minimal standards, forcing lesser capitalized firms from the marketplace. Regulatory pressures can sometimes limit the operation or entrance of very large firms with an unequal marginal advantage. Putting a leash on the dog fight reduces the efficiency of the dogfight, but it saves more dogs.

Answer 2

aggressive markets will maximize client and producer surplus, in simple terms as you stated. aggressive markets are extra perfect than monopolies in maximum circumstances. a typical monopoly with marketplace means will seek for to maximise income by using placing marginal cost to equivalent marginal sales. this occurs at a volume under the aggressive marketplace equilibrium, and on the quantity, the monopoly will set cost equivalent to the element on the call for curve the place it is the monopoly's income maximizing volume. so as meaning much less products bought, and that they are ripping off the buyer. of direction, deadweight loss is generated while there is surplus that could have been in any different case been captured if it is a aggressive marketplace. Monopolies frequently use suggestions to cut back deadweight loss by using sucking up extra producer surplus by using utilising cost discrimination. maximum cost discrimination methods cut back deadweight loss, as a replace of removing it. in spite of if, it is purely possible that as quickly as a monopoly is shaped, the expenditures of their output decreases. If the effects of their cost help outweighs the deadweight loss, the monopoly is extremely extra perfect for society as an entire than a aggressive marketplace. The "rectangle" shaped by using the previous and new marginal expenditures represents a welfare income, that should probably be bigger than the deadweight loss. An occasion: person hospitals in a city with extreme MRI expenditures agree on a merger so as that they are able to allocate their MRI centers to be cost-effective. the effects of cost help outweigh the deadweight loss shaped by using the merger.

Answer 3

I don't understand your question. If it is a monopoly, it isn't competitive. Who would want to reduce efficiency?