In the industrial market, there are many kinds of issues and monopolistic competition is one of them. This idea came from the monopoly of brand products. It is a competition among the same type of product brands with imperfect substitute products.
Marketplace issues are significant for the growth of the industry, and this competition is a vital part of that. It helps the industry to grow and be more efficient. This competition also increases the experience of a brand and the industry becomes glorious. Nowadays, changes are in every corner, so the industry condition should also be changed for betterness.
Monopolistic competition definition says that it stands for an industry in which many firms services similar products which are not a perfect substitute. There are very low barriers to entry or exit in monopolistic competition. In this competition, one firm decision doesn't affect the whole industry or another firm. Monopolistic competition is just related to the business strategy of brand variation.
Monopolistic competition means monopoly plus a perfect competition. This market is a perfect mixture of monopoly and perfect competition. This industry is one of the best classical monopolistic competition examples.
Monopolistic competition is half monopoly half and perfect competition. It combines elements of both in a theoretical state. In this competition, every brand tries to make its unique product, and they make it slightly different from other brands of the same item. While we are judging them roughly, there is no difference as such. Although when we examine them closely, we can find some little difference between different brand products.
If we take the soap brands of India as monopolistic competition examples, it can be easily revealed the idea of monopolistic competition. Though all the soap brands such as Lux, Dove, Vivel, Fiama, Pears produce the same item, They contain some different features from others in their product to make it unique.
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A Large Number of Sellers: There are many sellers involved in the market of monopolistic competition. They also own some small shares of that market.
Entry-Exit Freedom: Any firm can enter or exit in this industry for monopolistic competition. They are free to get involved in this or they can also get out of this as per their wish. It is not necessary to explain the reasons behind it.
Product Variation: Every brand involved in this industry tries to produce item variation to add monopoly. They make some small differences so that their product can be unique. All the products are somewhere different from others. Therefore, the brand can fix the price of the product as per their choice. It also creates a problem for all the brands as they tend to lose some customers.
Non-Price Factors: Besides the price competition, there are some other factors to compete in the market. The brands attract customers through advertising, product development, extra features, great service, etc. All the brands promote and take the initiative to make their product better than other available products in the market.
There are two types of equilibrium in this competition that define monopolistic competition as imperfect competition i.e. short-run equilibrium and long-run equilibrium.
Short-run equilibrium increases profit and makes marginal revenue (MR) and marginal cost (MC) equal. Long-run equilibrium makes changes in marginal and average revenue (MR & AR) in the entrance of other brands. The firm never sells products above average cost and doesn't claim economic profit in long-run equilibrium.
In the monopolistic market, you can see many monopolistic competition examples following all the classic rules of this industry. Some common examples are soap brands, toothpaste brands, electronics, furniture, smartphone, stationeries, etc. All these brands make their products considering all these competitive factors and ensure the uniqueness of their product.
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The monopolistic competition contains many things excluding pricing and other competition. Those things can make a lot of changes in this market. If you scrutinize closely, you can notice those factors in monopolistic competition examples.
Those secondary factors are demand and supply changes, simultaneous changes of the marketplace, features of perfect competition, price under or average value, equilibrium changes, monopolistic revenue curve, monopoly market, demand curve, oligopoly, demand curve, economical condition of the market and industry, etc.
1. What are the Primary Features of Monopolistic Competition?
Answer: Amongst all the marketing features of this competition, there are some primary features which are common for all brands. The number of sellers is one of them, and the customer numbers increase the competition of brands. Entry and exit freedom make a simultaneous change in the competition. Product differentiation is an important feature of the monopolistic market, which makes a huge change in the competition. The product selling cost of different brands is a noticeable feature to the customers, which is also a matter of concern. Lack of marketing knowledge, more elastic demand, less mobility are some other important features of this competition.
2. What are the Conditions of Monopolistic Competition?
Answer: There are some essential conditions in the market of monopolistic competition which the brands must follow. The main conditions are buyers and sellers, entry and exit barriers, perfect information, goods variation. Buyers and sellers criteria is a primary condition for being in this competition. You must have a minimum number of customers buying your product. There is no entry and exit barrier in the competition. A brand can make entry or exit anytime. To be in the competing market, perfect information about product and marketplace situations is necessary. Product variation of the brands involved in the competition is one of the most important conditions.