Final answer:
Duplicates and overlays in a competitive market can lead to lower profits for a company due to increased competition and the disruption of economies of scale. This situation negatively impacts consumers by potentially reducing choices and also discourages market innovation due to the decreased financial incentive to innovate.
Step-by-step explanation:
Competition from firms that offer better or cheaper products can lead to a decrease in profits for a company and potential job losses for workers. This economic reality is critical for businesses operating in a monopolistic competitive market where product differentiation and brand reputation are key factors. Increased competition can be a detriment to established businesses, but it serves as a boon to consumers who benefit from better or less expensive products and also fosters an environment that can drive the creation of innovative products and services.
However, when firms have to deal with duplicates and overlays, such as repetitive infrastructure or product mimicry, it can lead to higher production costs due to the absence of economies of scale. This, in turn, may force companies to raise prices, negatively impacting consumer choice and potentially decreasing the incentive for companies to innovate due to thinner profit margins. If competitors are also able to duplicate a company's unique selling proposition, the original firm must worry about retaining its market share against these new entries.