Final answer:
Firms may engage in anticompetitive practices to increase profits by reducing competition, even though such behaviors are illegal and susceptible to regulation. Monopolistically competitive firms are not considered productively or allocatively efficient. In the prisoner's dilemma, individuals pursuing self-interest can lead to worse outcomes than if they cooperated.
Step-by-step explanation:
Firms may choose to engage in anticompetitive practices for several reasons. These practices can include actions like price fixing, market division, and restricting output to maintain high prices. While these actions can lead to increased profits in the short term, they are illegal and can result in significant legal and financial consequences. Firms may exploit grey areas in regulation or engage in subtle forms of coordination that don't explicitly violate antitrust laws. The motive behind these practices is usually to increase profits by reducing competition. It’s important to note though, that such actions are against the law and regulators actively work to identify and punish such behavior.
Market efficiency considerations for monopolistically competitive firms reveal that they are neither productively efficient (because they produce at average cost, not minimum cost) nor allocatively efficient (as price is higher than marginal cost). In oligopolies, firms may act more in line with a monopoly when colluding, or as competitors when trying to gain market share. As for the prisoner's dilemma, individuals benefit more from cooperation, but fear of the other party deviating causes them to pursue self-interest, often leading to worse outcomes for both.