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Since Adam Smith set forth the theory of economic competition in An Inquiry Into the Nature and Causes of the Wealth of Nations, the assumption that firms are free to set prices and can choose to do so as a way to compete against rivals has been widely accepted. For Smith and later economists, efficiently allocating productive resources to their most highly valued uses was a major activity for successful competition. Later economic theorists concluded that no system of resource allocation is more efficient than perfect competition. However, a continuing debate in the history of (micro) economics concerns whether or not monopolistic competition is distinctly different from and possibly more efficient at creating and sustaining markets than perfect competition and monopoly. Many distinguished scholars have ...

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