What is monopolistic competition?

How can we define the concept of monopolistic competition? What is it that makes us talk about monopolistic competition? A high percentage of sellers is what perfectly identifies this type of competition, since we find ourselves in a situation in which products have a strong influence on the market, an issue that in part has a significant influence on the price of the product, especially to the extent that the competitors of the product generate new differences on it.

Characteristics of monopolistic competition

The most obvious characteristic of monopolistic competition is the presence of different competitors, that is, selling companies that work against other companies that are dedicated to the same purpose. Therefore, its particularity is the reduced market share and that is its main differentiating element. In addition, in this type of case there is freedom to enter and exit the monopolistic competition, this means that there are no obstacles at the time that it is decided to exit the market.

We also observe other features of monopolistic competition, such as the particularity of the product. That is, the product that the competition offers is the same, but the reality is that in order to differentiate itself from each other, the product can undergo certain modifications to make it different from the rest and provoke that purchase action.

As a consequence, the buyer is the one who has the final decision and will be aware at all times of each of the differentiating elements of the product depending on the company that creates it. However, the creative companies have the power to influence the price of the product and therefore exercise control over it.

What are the differences between monopolistic and perfect competition?

This is a frequent doubt, but to get rid of doubts, there is a clear difference between monopolistic and perfect competition, and that is that in the case of perfect competition there is not such a high control with respect to the market by companies.

The particularity of the perfect competition What we do not find when we talk about this monopolistic competition is that in the case of perfect competition everything varies and depends on the VALUE and the demand, and that is what determines the value of each sale.

Examples of monopolistic competition

One of the clearest examples of monopolistic competition is that found in fast food restaurants. There are several internationally famous chains that exist and of all of them, the basic or star product is usually the same. An example is McDonald's, Burger King, or Five Guys. As we can see, the offer is wide and each one of them is known for a different concept.

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