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Monopolistic competition can bring the following advantages:

  1. There are no significant barriers to entry; therefore markets are relatively contestable.
  2. Differentiation creates diversity, choice and utility. For example, a typical high street in any town will have a number of different restaurants from which to choose.
  3. The market is more efficient than monopoly but less efficient than perfect competition - less allocatively and less productively efficient. However, they may be dynamically efficient, innovative in terms of new production processes or new products. For example, retailers often constantly have to develop new ways to attract and retain local custom.
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11y ago
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12y ago

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Q: Advantages and disadvantages of monopolistic competition?
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