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Monopolistic Competition

What is Monopolistic Competition?

Monopolistic Competition is a market structure, that is characterized by having many firms that sell products that are differentiated, resulting in no perfect substitutes in the market. There are enough consumers and producers in the market such that no firm is a price setter, however, firms do have a degree of control over the price they set. Products in this type of market structure, are different enough that there are non-price differences between competing products. Barriers to entry and exit the market are generally small. The main characteristic of monopolistic competition is that there is product differentiation, some consumers may choose to pay a little more for a product from a certain producer, something that on perfect competition is not allowed.

Additional Resources

CFI is a global provider of financial modeling courses and of the FMVA Certification. CFI’s mission is to help all professionals improve their technical skills. If you are a student or are looking for a career change, the CFI website has a multitude of free resources to help you jumpstart your Career in Finance. If you seek to improve your technical skills check out some of our most popular courses. Below are some additional resources for you to further explore:

 

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