Need economics help: what is the list of characteristics of monopolistic competition?

Economics
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what is the list of characteristics of monopolistic competition?  And why did you choose monopolistic competition over oligopoly?

Nov 18th, 2015

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Monopolistic competition refers to a market situation where there are large number of firms which sellclosely but differentiated product.

The characteristic of the monopolistic competition are as follows:-

a)Product differentiation.

b)Many firms

c)No entry and exit cost in the long run.

d)Independent decision making.

e)same degree of market power

f)Buyers and Sellers do not have perfect information

Oligopoly means few sellers. In an oligopolistic market, each seller supplies a large portion of all the products sold in the marketplace. In addition, because the cost of starting a business in an oligopolistic industry is usually high, the number of firms entering it is low.

Why to choose monopolistic competition:-As a buyer of the product we will have the option of selecting the best product in the market over many products at an affordable rate.In case of oligopolistic competition there is no such option as the sellers are limited and hence no variation in product.

As a seller monopolistic competititon would be preferred considering the cost of starting the business.It would cost less to start a business in monopolistic market.


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Nov 18th, 2015

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