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 Says:
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). Related Terms:
Demand
Economics
Elasticity
Legal Monopoly
Monopoly
Perfect Competition
Price Taker
Substitute
Supply
Treble Damages |