DEFINITION of 'Monopolistic Competition'
A type of competition within an industry where:
1. All firms produce similar yet not perfectly substitutable products.
2. All firms are able to enter the industry if the profits are attractive.
3. All firms are profit maximizers.
4. All firms have some market power, which means none are price takers.
INVESTOPEDIA EXPLAINS 'Monopolistic Competition'
Monopolistic competition differs from perfect competition in that production does not take place at the lowest possible cost. Because of this, firms are left with excess production capacity. This market concept was developed by Chamberlin (USA) and Robinson (Great Britain).
A market structure in which the following five criteria are met: ...
A single entity that charges different prices, which are not ...
When companies continuously lower prices to undercut the competition. ...
Monopoly status given by the government to a company. A franchised ...
A social science that studies how individuals, governments, firms ...
A measure of a variable's sensitivity to a change in another ...