Compare and contrast perfect competition and monopolistic competition - Essay Example

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The market price is not controlled by a particular business under monopolistic competition this is because there are several players in the market and they produce different products. The barriers to entry and exit are really few when it comes to monopolistic competition. The…

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Compare and contrast perfect competition and monopolistic competition

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Subject: Macro & Microeconomics
Type: Essay
Level: Masters
Pages: 1 (250 words)
Downloads: 4
Author: kubchance

Extract of sample "Compare and contrast perfect competition and monopolistic competition"

Client’s 11 October This paper will shed light upon the major differences between perfect competition and monopolistic competition. The market price is not controlled by a particular business under monopolistic competition this is because there are several players in the market and they produce different products. The barriers to entry and exit are really few when it comes to monopolistic competition. The price is controlled to a certain extent by producers under monopolistic competition. Independent decision making is a very important characteristic of monopolistic competition.

Positive profits are pursued by firms and they enter in numbers under monopolistic competition. Perfect competition on the other hand has some really fine differences, the entry and exit barriers are zero under perfect competition. Perfect mobility which refers to zero transaction cost is another very important feature of perfect competition. Profit maximization is the sole aim when it comes to perfect competition. Infinite sellers and buyers show their willingness to sell and buy products at a certain price under perfect competition.

"Prefect competition is a market in which there are many firms selling identical products with no firm large enough, relative to the entire market, to be able to influence market price". (Perfect Competition) These were some of the major differences between perfect competition and monopolistic competition. ReferencesPerfect Competition (2011). Economics Concepts. Web. Retrieved from:

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