Monopolistic Competition - chamberlin

Meaning and Nature

• Monopolistic competition refers to a market situation in which there are either many producers producing goods which are close substitutes to one another or the product is differentiated.

Definitions

• Joe S. Bain – “monopolistic competition is found in the industry where there are a large number of small sellers selling differentiated but close substitute products”.

• Meyers – “monopolistic competition is a situation where there many be many sellers, but with differentiated products so that competition is no longer on price basis.”

• Stonier and Hague – “there is competition which is keen, though not perfect, between many firms making similar products.”

Features

• Many firms• Independent price policy• Product differentiation• Free entry and exit• Selling cost• Lack of perfect knowledge• Lack of mobility of factors• More elastic demand

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Equilibrium of firm under Мmonopolistic competition

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