  We study a steady state of a free entry oligopoly with differentiated goods,
that is, a monopolistic competition, with sluggish adjustment of entry and exit
of firms under general demand and cost functions by a differential game
approach. Mainly we show that the number of firms at the steady state in the
open-loop solution of monopolistic competition is smaller than that at the
static equilibrium of monopolistic competition, and that the number of firms at
the steady state of the memoryless closed-loop monopolistic competition is
larger than that at the steady state of the open-loop monopolistic competition,
and may be larger than the number of firms at the static equilibrium.
