Monopolistic Competition

Click HERE to read the notes

This model is a blend of monopoly and perfect competition. Under perfect competition there are a large number of firms selling a similar product. Under monopoly there is one firm selling a unique product. In the real world there are industries comprised of many sellers selling the same product, each with some degree of uniqueness. There are many hair styling saloons all offering the same type of services, but their services are not viewed as completely equal in the eyes of the customers. This is a case of monopolistic competition and it presents a different outcome than both perfect competition and monopoly. We will discuss the features of monopolistic competition in this section