Please describe the one feature you think most distinguishes the Monopolistically Competitive market structure. Please do...

Please describe the one feature you think most distinguishes the Monopolistically Competitive market structure. Please do the same for Oligopoly. What is the impact on the market because of this distinguishing feature? Please compare the strategies these firms use to determine the price of their products.

Expert Solution

Most significant features that distinguish monopolistically competitive market structure is the product differentiation and this is because in oligopoly also there can be similar product and in perfect competition the product is always homogeneousbut only due to differentiated product even though there are less barriers to entry the monopolistic competition is still making positive profits on the whole.

For an oligopoly the mostsignificant feature is nothing but the market share on market power existence on this is because there are high barriers to entry and there are few players in the market where the top market share from will have the market power mostly and this is not present in any of the other market structures.

In this regard the distinguishing feature of monopolistic competition that is product differentiation can give the Monopolistic competition,a lot of brand loyalty customer as a result of which the price can be above the marginal cost where it can earn a positive profits and the distinguishing feature of oligopoly is that if you have market power you can always set the price so that others will follow if you don't have market power you have to follow the market leader

Rahul Sunny answered 2 years ago

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