What is Monopolistic Competition ? Its Meaning ↓
Pure monopoly too perfect contest are ii extreme cases of marketplace structure. In reality, at that spot are markets having large issue of producers competing with each other inward social club to sell their production inward the market. Thus, at that spot is monopoly on 1 mitt too perfect contest on other hand. Such a mixture of monopoly too perfect contest is called equally monopolistic competition. It is a illustration of imperfect competition.
Monopolistic contest has been introduced past times American economist Prof. Edward Chamberlin, inward his majority 'Theory of Monopolistic Competition' published inward 1933.
Features of Monopolistic Competition ↓
The next are the features or characteristics of monopolistic contest :-
1. Large Number of Sellers
There are large issue of sellers producing differentiated products. So, contest alongside them is real keen. Since issue of sellers is large, each seller produces a real pocket-sized utilization of marketplace supply. So no seller is inward a lay to command cost of product. Every trouble solid is express inward its size.
2. Product Differentiation
It is 1 of the almost of import features of monopolistic competition. In perfect competition, products are homogeneous inward nature. On the contrary, here, every producer tries to continue his production different than his rival's production inward social club to hold his carve upwardly identity. This boosts upwardly the contest inward market. So, every trouble solid acquires unopen to monopoly power.
3. Freedom of Entry too Exit
This characteristic leads to rigid contest inward market. Free entry into the marketplace enables novel firms to come upwardly with unopen substitutes. Free entry or piece of job maintains normal profits inward the marketplace for a longer bridge of time.
4. Selling Cost
It is a unique characteristic of monopolistic competition. In such type of market, due to production differentiation, every trouble solid has to incur unopen to additional expenditure inward the shape of selling cost. This cost includes sales promotion expenses, promotion expenses, salaries of marketing staff, etc.
But on trouble organization human relationship of homogeneous production inward perfect contest too cypher contest inward monopoly, selling cost does non be there.
5. Absence of Interdependence
Large numbers of firms are different inward their size. Each trouble solid has its ain production too marketing policy. So no trouble solid is influenced past times other firm. All are independent.
6. Two Dimensional Competition
Monopolistic contest has ii types of contest aspects viz.
- Price contest i.e. firms compete with each other on the footing of price.
- Non cost contest i.e. firms compete on the footing of brand, production lineament advertisement.
7. Concept of Group
In house of Marshallian concept of industry, Chamberlin introduced the concept of Group nether monopolistic competition. An manufacture agency a issue of firms producing identical product. Influenza A virus subtype H5N1 grouping agency a issue of firms producing differentiated products which are closely related.
8. Falling Demand Curve
In monopolistic competition, a trouble solid is facing downward sloping ask plication i.e. elastic ask curve. It agency 1 tin sell to a greater extent than at lower cost too vice versa.
