Monopolistic Competition

MONOPOLISTIC COMPETITION 

Monopolistic competition is a form of imperfect competition where by all firms produce similar yet not perfectly sustainable products. 

Monopolistic competition has large number of sellers

which means they only need small market shares to develop the business. 

Collusion in monopolistic competition does not exist hence illegal cooperation and conspiracy is nothing to worry about in monopolistic competition. 

Monopolistic competition is an independent form of business 

hence it’s easy way in and easy way out. 

The examples of monopolistic competition are, fish market, hawker stalls and so on.

Perfect competition is a hypothetical market structure. 

It is used as a benchmark against which other market structures are compared. 

The industry which is likely related to perfect competition is the agricultural industry. 

All firms in perfect competition produces identical product. 

Each individual firm assumed to be a price taker. To compare monopolistic competition and perfect competition, 

perfect competition are able to achieve productive efficiency, 

where monopolistic competition are not able to achieve productive efficiency. 

In conclusion, monopolistic competition is suitable for a small market because they are able to control the price of the market. Perfect competition could not control the price of a small market because they are not able to influence the price of the products in the market. 

Written by : Harith Chua