ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Due to having rather fixed market prices, leading to inelastic demand, they engage in product differentiation. Monopolistic markets engage in non-price competition because of how the market is designed where the firm dominates the market.

Detailed explanation-2: -Non-price competition: In monopolistic competition, sellers compete on factors other than price. These factors include aggressive advertising, product development, better distribution, after sale services, etc. Sellers don’t cut the price of their products but incur high costs for the promotion of their goods.

Detailed explanation-3: -In monopolistic competition, one firm does not monopolize the market and multiple companies can enter the market and all can compete for a market share. Companies do not need to consider how their decisions influence competitors so each firm can operate without fear of raising competition.

Detailed explanation-4: -The firms within monopolistic and oligopoly market compete in non-price competition as “the differentiated goods” is one of the main features of both the markets.

Detailed explanation-5: -Product Differentiation: Product differentiation is the main feature of monopolistic competition. Product differentiation means that product of different types, brands, and qualities will be available to customers in a fixed time period.