Monopolistic competition is a market structure with many small businesses that sell similar but differentiated products. While firms have some control over pricing, they face significant competition and low profit margins due to the elastic demand curve and ease of market entry. To be successful, businesses must focus on cost efficiency, advertising, and differentiating their unique product offerings from competitors.

1. Monopolistic Competition Anne-Claire Ramser Name: Monopolistic Competitors

2. What is a monopolistic competition? Common market structure The products are substitutes, but are not exactly alike Motor vehicles for i.e. Many producers and consumers No business has total control over the market price

3. The Pros and Cons Pros We are different We have good incentives We have a degree of market power Cons Many competitors We have to accept low profit margins Easy for others to enter the market

4. Characteristics of Monopolistic Competition Almost the same as in perfect competition Competitive competition has diverse products Demand curve faces downward highly elastic but not flat

5. What do we do? We have influence on prices within the market We focus on cost efficiencies Advertising The importance of looking unique We set the price As monopoly rather than an oligopoly

6. Examples Restaurants Wendy’s Tully’s Cereal Clothings Food

7. Examples

8. Monopolistic Competition

9. What we sell CA shorts and shirts CA logo brand with COLORS You are going to buy them Why? However, you may choose to select the regular CA shorts and shirts

10. Summary Easy to enter the market Lots of competition The demand is highly elastic We have some degree of market power