Editing Monopolistic competition (section)

=== Socially undesirable aspects compared to perfect competition===
* ''Selling costs'': Producers under monopolistic competition often spend substantial amounts on advertising and publicity. Much of this expenditure is wasteful from the social point of view. The producer can reduce the price of the product instead of spending on publicity.
* ''Excess capacity'': Under imperfect competition, the installed capacity of every firm is large but not fully used. Total output is, therefore, less than the output which is socially desirable. Since production capacity is not fully used, the resources lie idle. Therefore, the production under monopolistic competition is below the full capacity level.
* ''Unemployment'': Idle capacity under monopolistic competition expenditure leads to unemployment. In particular, unemployment of workers leads to poverty and misery in the society. If idle capacity is fully used, the problem of unemployment can be solved to some extent.
* ''Cross transport'': Under monopolistic competition expenditure is incurred on cross transportation. If the goods are sold locally, wasteful expenditure on cross transport could be avoided.
* ''Lack of specialisation'': Under monopolistic competition, there is little scope for specialisation or standardisation. Product differentiation practised under this competition leads to wasteful expenditure. It is argued that instead of producing too many similar products, only a few standardised products may be produced. This would ensure better allocation of resources and would promote the economic success of the society.
* ''Inefficiency'': Under perfect competition, an inefficient company is thrown out of the industry. But under monopolistic competition, inefficient companies continue to survive.