IGNOU BCOG 171 2026 2027 - Explain fully the concept of monopolistic competition. What are

Question

Explain fully the concept of monopolistic competition. What are the reasons behind the difficulties which come in the way of free entry of firms into a market?

13 Aug 2026

Answer :

Word Count : 625

Monopolistic competition is a market structure in which there are a large number of firms producing goods that are close substitutes for one another but are not identical. It combines features of both perfect competition and monopoly. Like perfect competition, there are many buyers and sellers, and firms can generally enter or leave the market. Like monopoly, each firm has some control over the price of its product because its product is differentiated from those of competing firms. Product differentiation is the most important characteristic of monopolistic competition. Firms differentiate their products through differences in quality, design, packaging, colour, brand name, location, after-sales service and advertising. For example, different brands of toothpaste, soap, restaurants and clothing provide products that satisfy similar wants but are perceived

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