monopolistic competition model

Monopolistic competition is a market structure where many firms sell similar but not identical products, such as clothing brands or restaurants. Each business has some control over its prices because their products have unique features or branding, but competition is still intense because many alternatives exist. New firms can enter or exit easily, leading to a dynamic environment. While firms aim to attract customers by differentiating their products, they face the challenge of balancing product uniqueness with cost and price considerations. This model explains how many markets operate with multiple sellers offering somewhat distinct choices to consumers.