MONOPOLISTIC COMPETITION

MONOPOLISTIC COMPETITION

The monopolistic competition is also called as imperfect competition because this market structure lies between the pure monopoly and the pure competition.

IN this market ,  there are a large number of firms that produce differentiated products which are close substitutes for each other.

FEATURES ARE :
                        1. Product Differentiation
                        2. Large number of firms
                        3. Free Entry and Exit
                        4. Heavy expenditure on Advertisement and other Selling Costs
                        5.  Product Variation
EXAMPLES : 
                 1. CLOTHING SHOPS
                 2. GAS STATION
                 3. GROCERY STORES 
                 4. ATHLETIC WEAR
                 5. FAST FOOD RESTAURENT
                 6. BUSINESS SUPPLY STORES
                 7. HOME SUPPLY STORES 
                 8. PET FOODS 

Market Types and its Features

Market Structure and its Types:

Market Structure is playing a key role in economics and the present business situation.Based on the number of firms and the their types market structure is classified into 4 different types. Market Structure is mainly concentrating on number of sellers, nature of product,entry and exit level of firms,control over prices etc.

Types:

1.Perfect Competition:

It is a type of market where it is dealing with very large number of buyers and sellers and in this market the price is fixed.There is no chance to influence the market price on its own for an individual firm.These markets we can observe in our daily life.

Example:

Agriculture commodities like where farmers are going to sell their huge amount of products for a particular price which was fixed.

2.Monopolistic Competition:

In this market structure there will be a large no. of firms which sell closely related but differentiated products.In this market there is not at all any restriction for the entry and exit level in a market.These type of firms are several in number.

Example:

Restaurants and clothing stores are perfect example for this market.

3.Oligopoly:

Oligopoly is a type of market where they are very few firms selling homogeneous or differentiated products.The freedom of entry for this market is restricted.

Example:

Automobiles market and Mobile Networks 

4.Monopoly:

Monopoly market is the one and only market and it doesn't have any perfect competition where it is going to rule like as a single seller where it has no close substitutes.This market is completely a unique kind of market.

Example:

Indian Railways is the best example for Monopoly Market.