Monopolistic Competition refers to a
type of market structure, where the number of sellers selling similar but not
exactly identical products, is large. The product or services offered for sale
in a monopolistic competition are close substitutes for one another. Such a
market contains the features of both monopoly and perfect competition and
is found in the real world situation. The salient features of a monopolistic
competition are given below:
- It is a non-price competition. The firms are price makers, and so every firm has its own pricing policy, and thus the sellers are free to make decisions regarding the price and output, on the basis of the product.
- The entry and exit, into and out of the industry are easy because of fewer barriers.
- Product differentiation exists in a monopolistic competition, where the products are distinguished from each other on the basis of brands.
- Highly elastic demand curve.
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