Monopolistic Competition

Monopolistic competition is a market structure characterized by many competing firms that produce similar but differentiated products, giving each firm some degree of market power or control over its pricing and output decisions. Unlike perfect competition, where products are identical and firms are price takers, monopolistic competition allows firms to differentiate their products through branding, marketing, and product differentiation strategies. While entry and exit barriers are low, firms in monopolistic competition face competition from close substitutes and must balance product differentiation with pricing considerations.