Question

Is monopolistic competition closer to competition or closer to monopoly? Discuss with examples.

Answer 1

Answer : Monopolistic competition is mixture of both perfect competition and monopoly. So it is diffcult to conculde that monopolistic is closer to which competition. From my point of view monopolistic competition is closer to perfect competition because

• In monopolistic competition there are large number of sellers selling the product as same in perfect competition.
• Product should be different but they serve similar need of the consumer.
• Monopolistic competition is closer to perfect competition because they have little or no control over the price.
• Freedom of entry and exist is same as perfect competition

These are the reasons which shows that monopolistic competition is closer to perfect competition.

Examples : Soaps, Toothpaste are the best example of monopolistic competition

Toothpaste have different brand such as colgate, peposdent , neem etc but they are selling same product in the market. As there are thousands of brands so there are less restrictions and freedom of entry and exist.

Pepsi VS Coke is the best example of monopolistic competition. As they compete with each other on the basis of taste, price etc in the market.