When firms enter a monopolistically competitive market and the business-stealing externality is larger than the product-variety externality then ?

• A. there are too many firms in the market and market efficiency could be increased if firms exited the market
• B. the number of firms in the market is optimal and the market is efficient
• C. There are too few firms in the market and market efficiency could be be increased with additional entry
• D. The only way to improve efficiency in this market is for the government to regulate it like a natural monopoly.