Monopolistic competition

Definition

Monopolistic competition is a market structure characterized by many sellers offering differentiated products or services, which are not perfect substitutes for each other. In this environment, firms have some power to set prices due to product differentiation.

Related terms

Product Differentiation:

The process businesses use to make their products or services stand out from competitors' offerings as perceived by consumers.

Market Structure:

The organizational and other characteristics of a market that influence the nature of competition and pricing.

Price Maker: A firm that has some control over the price it charges because its product is unique in some way and not perfectly competitive