The Buzzy New Drinking Trend: Alcohol-Free Booze

All firms maximize profit by producing the quantity at which marginal revenue equals marginal cost. Because the firms in the non-alcoholic beverage market were making an economic profit, Athletic Brewing and Seedlip entered the market to share that profit.

The market for non-alcoholic beverages is a monopolistic competition, so the quantity produced is less than the efficient quantity. But the market might be considered efficient because of the gains that arise from the value consumers place on product variety. The market might be considered efficient if the loss arising from producing an inefficient quantity is offset by the gain from product variety.