DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : A.Satyavani Kumari
Designation : Lecturer
Branch : DCCP
Institution : Govt. Poly. for Women, Suryapet
Year/Semester : III Year/ V Semester
Subject : Business Economics-I
Subject Code : CCP-502
Topic : Markets
Duration : 50 mts.
Sub Topic : Features of Monopolistic Competition.
Teaching Aids : PPT

CCP-502.60 1
Objectives

On completion of this period you would be

able to know
 Define Monopolistic competition
 Explain Features of Monopolistic
competition

CCP-502.60 2
Review
In the previous class we have discussed about
 Classification of markets
 Features of:
 Perfect competition
 Monopoly markets
 Duopoly markets
 Oligopoly markets

CCP-502.60 3
 Perfect competition and pure monopoly as unrealistic

 “The Theory of Monopolistic Competition”

 Group of monopolists leads to monopolistic

competition
- E.H. Chamberlin

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Monopolistic Competition

 Competition is keen but neither perfect nor pure

 Product differentiation prevails
 A mixture of competition and a certain degree of
monopoly power

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Monopolistic competition is found in many fields
like

a) Retail Trade
Ex: Cloth stores, drug stores etc

d) Service Industry
Ex: Beauty parlors, Coaching centres etc

g) Manufacturing Industry
Ex: Electrical appliances manufacturing etc

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Features of Monopolistic Competition
 Large number of sellers

 Products are closely related but not identical

 Less chance for collusion of firms because of

large number of sellers

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 Limited degree of control over market price
 Action of a firm leads to an insignificant
reaction because of large number of sellers
 Product differentiation

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 Large number of buyers

 Firms can enter or quit freely

 Selling costs & Advertisement plays an

important role

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 The concept of industry does not arise due to
product differentiation.

 Instead of industry, there is group -Chamberlin

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Group

A cluster of firms producing very closely related but

differentiated products.

No restrictions for a firm to enter into a group till it

reaches equilibrium level.

CCP-502.60 11
Summary

 Criticism about Perfect / Monopoly theory

 Monopolistic competition
 Features of Monopolistic competition

CCP-502.60 12
Quiz

1. Markets can be classified on the basis of ______

a) Place
b) Time
c) Competition

CCP-502.60 13
1. Imperfect Markets can be divided into how many
categories?

Ans : Imperfect markets can be divided into 4

categories. They are:
a) Monopoly markets
b) Duopoly markets
c) Oligopoly markets
d) Monopolistic competition

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3. Monopolistic competition is a mixture of __________
Ans: Competition and Monopoly

4. Under monopolistic competition products are identical

YES/NO
Ans: No

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Frequently Asked Questions

1. Briefly explain about monopolistic competition

and its features.
2. Define Monopolistic competition
3. List the features of Monopolistic competition

CCP-502.60 16