What is Monopolistic competition?
'''Monopolistic competition''' is a [[market forms|market form]]. Like with [[Perfect competition]], there are many [[buyer]]s and [[seller]]s. But the market is not perfect. This is because the products are not [[homogeneous]], or because the buyers have explicit or implicit [[preference]]s. This market form is quite common. As an example, take a [[bakery]]. There are many bakeries in the town, but one of those bakeries can demand a slightly higher price for [[bread]], because it is the only one in a certain part of the town. Monopolistically competitive firms are able to gain a greater degree of [[market share]] and as a result, increase prices. If a particular bakery is known for selling the best pies and pasties in town, they can increase their prices for pies and pasties as they know consumers will pay slightly more for a superior product. This is known as establishing a brand name and brand [[loyalty]]. ==Related pages== *[[Constitutional economics]] *[[Political economy]] {{Market-forms-footer}} {{stub}}