Monopolistic Competiton


What is Monopolistic Competition?

The model of monopolistic competition describes a common market structure in which firms have many competitors, but each one sells a slightly different product. This market structure also has limited barriers for entering and exiting the market.

Pros and Cons of Monolistic Compeition

Pros: 1. The Promotion of Competition (lack of Barriers to Entry) 2. Differentiation Brings Greater Consumer Choice and Variety 3. Consumers Become More Knowledgable of Products-due to Advertising

Cons: 1. Advertising-although it can also be beneficial, it can also manipulate and distort what consumers want 2. High Expenses-Businesses have to make their product/business become well known, have to spend a lot of money. 3. Competition everywhere-Because of how easy it is to enter and exit, these businesses will always be competing with others. Though good for the consumer, it can become tiresome in some cases for the business.

Episode 29: Monopolistic Competition