When different businesses promote similar products that differ in some characteristics but satisfy the same consumer need, the competitive environment is most likely to be a monopolistic competition.
What is monopolistic competition?
- When a large number of businesses provide rival goods or services that are comparable but imperfect alternatives, monopolistic competition exists.
- A monopolistic competitive industry has minimal entry requirements, and decisions made by any one firm do not immediately affect those of its rivals.
- The price and marketing choices made by the rival companies serve as their points of differentiation. Between a monopoly and perfect competition, monopolistic competition exists, combines aspects of both, and comprises businesses with comparable but distinct product offerings.
Industries with monopolistic competition include those in restaurants, hair salons, household goods, and clothes. Numerous rival businesses compete to sell, advertise, and price goods like dish soap and hamburgers.
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