Monopolistic competition is a market structure with multiple producers making similar but not identical products. While the goods are substitutes for each other, producers have limited control over price and must engage in non-price competition around factors like location, quality, and branding in order to differentiate their goods and attract consumers. Under monopolistic competition, multiple monopolies coexist producing differentiated goods, where consumers can choose between close substitutes.

1. Monopolistic
Competition
What is it?

2. Monopolistic Competition Defined
 Monopolistic Competition is a Market Structure in which multiple
Producers make similar, but not identical, products.
 The goods are similar enough to be Substitutes for each other.
 The Producers must engage Consumers in areas beyond Price
in order to sell their goods.
 This is referred to as Non-Price Competition.
 It encompasses factors such as the Location of the Good,
the Quality of Service offered by the Producer, the Physical
Characteristics of the Good, and the popular Image of the
Good.
 Each Producer will do everything that it can in order to make
their good stand out as they have limited control over Price,
because there are many Substitute goods available at
similar prices.

3. Multiple Participants
 In Monopolistic
Competition, multiple
Monopolies co-exist
while producing Goods
that are similar enough
to readily act as
Substitutes for each
other.

4. Similar Products
 In Monopolistic
Competition, the
products available in the
Market must be Similar,
but not Identical.
 This allows the
Consumer to select the
Good best suited to
their tastes and needs
at Prices comparable to
their Substitutes.

5. Limited Price Control
 In Monopolistic
Competition, Producers
have limited control
over the Prices that they
can charge because
Consumers have a
number of alternatives
readily available to
them.

6. Differentiated Products
 In Monopolistic
Competition, Producers
must act to separate
their good from those
offered by their
competitors.
 They do this by creating
both perceived and
actual differences
between their products
to make them more
desirable to select
Consumers.

7. Differentiated Products
 In Monopolistic
Competition, Producers
must act to separate
their good from those
offered by their
competitors.
 They do this by creating
both perceived and
actual differences
between their products
to make them more
desirable to select
Consumers.