This paper examines market failure in a monopolistically competitive industry with differentiated products. The set of products sold and prices are compared between monopolistic competition and a social optimum. The industry is asymmetric as products differ in their objective characteristics. The optimal product set does not coincide with that produced by the market. A Ramsey pricing rule is derived. A numerical example is provided
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Paper provided by Queen's University, Department of Economics in its series Working Papers with number
376.