A monopoly is the type of imperfect competition where a seller or producer captures the majority of the market share due to the lack of substitutes or competitors. A monopolistic competition is a type of imperfect competition where many sellers try to capture the market share by differentiating their products.
In monopolistic competition, there are many producers and consumers in the marketplace, and all firms only have a degree of market control. In contrast, whereas a monopolist in a monopolistic market has total control of the market, monopolistic competition offers very few barriers to entry.
in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure. a monopoly has market power while a firm in monopolistic competition does not have any market power.
What is the key difference between a competitive firm and a monopoly? A monopoly firm has market power, the ability to influence the market price of the product it sells. A competitive firm has no market power.
The main features of monopolistic competition are as under:Large Number of Buyers and Sellers.Free Entry and Exit of Firms.Product Differentiation.Selling Costs.Lack of Perfect Knowledge.Less Mobility.More Elastic Demand.
The primary feature of a monopoly is a single seller and several buyers. Also, in a monopoly, there is no difference between the firm and the industry. This is because there is only one producer and/or seller. Therefore, the firm's demand curve is the industry's demand curve.
Monopolistic competition is like a monopoly because firms face a downward-sloping demand curve, so price exceeds marginal cost. Monopolistic competition is like perfect competition because, in the long run, price equals average total cost, like free entry and exit drive economic profit to zero.
(1) Both in monopoly and monopolistic competition, the point of equilibrium is at the equality of MC and MR and the MC curve cuts the MR curve from below. ADVERTISEMENTS: (2) In both, the demand curve (AR) slopes downward to the right and the corresponding marginal revenue (MR) curve is below it.
In perfect competition, firms produce identical goods, while in monopolistic competition, firms produce slightly different goods.
The basic difference between Perfect Competition and Monopoly is that perfect competition involves a large number of sellers with a large number of buyers whereas a monopoly market has one single seller for a large number of buyers.