Monopolistic Competition

Introduction
In this investigation we are going to explain what a Monopolistic Competition is and how it works.
Explaining terms such as independent decision market, market power, and etc.

Thisinvestigation is a simple but complete investigation all the information included will help to understand completely what a Monopolistic competition is and how it is differentiated from a perfectcompetition.

We’ll show some examples of a monopolistic competition, so that people are able to understand how to know if a market is a perfect competition, or not.

So just to get you started inthis theme a monopolistic competition can be said to be one of the simplest and easiest market.

MONOPOLISTIC COMPETITION
Definition
A market structure in which several or many sellers eachproduce similar, but slightly differentiated products(the products are substitutes , because of differences such as branding), not exactly alike. Each producer can set its price and quantity withoutaffecting the marketplace as a whole
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This market concept was developed by Edward Hastings Chamberlin (USA) who wrote apioneering book on the subject, Theory of Monopolistic Competition (1933) and Joan Robinson (Great Britain).
There are six characteristics of monopolistic competition:
Product differentiation. Firms sellproducts that have perceived non-price differences. Firms produce similar yet not perfectly substitutable products. The products perform the same basic functions but have differences in qualities suchas type, style, quality, reputation, appearance, and location that tend to distinguish them from each other.
Many firms. There are many firms in each monopolistic competition product group, is thecollection of similar products and many firms on the side lines prepared to enter the market. The fact that there are many firms gives each firm the freedom to set prices, and each firm's actions have...