Business

Difference Between Monopoly and Monopolistic Competition

Main difference

Economic markets comprise both buyers and sellers. The buyer buys the products or services offered by the seller, at the same time that the seller does his best to satisfy the buyer through his product. When there are dozens of vendors available and there is less government interference, then the market is one of strict competition. It will be pertinent to mention here that there are mainly two types of competition that exist in the economic market, perfect competition and imperfect competition, perfect competition is the situation in the market when the price of the merchandise is not under the control of the sellers and individual buyers, and monopoly does not prevail in the market. The other characteristic of perfect competition is that the buyers are numerous. On the other hand, there are three types of imperfect competition; monopoly, oligopoly and monopolistic competition. Monopoly is the type of imperfect competition in which one seller or producers captivates the majority of the market since the products or services of close substitutes are not available to them. Contrary to this, monopolistic competition is the type of imperfect competition in which many companies have competitors, but each of them offers a slightly different or almost substitute product in the market. Monopoly is the type of imperfect competition in which one seller or producers captivates the majority of the market since the products or services of close substitutes are not available to them. Contrary to this, monopolistic competition is the type of imperfect competition in which many companies have competitors, but each of them offers a slightly different or almost substitute product in the market. Monopoly is the type of imperfect competition in which one seller or producers captivate the majority of the market since the products or services of close substitutes are not available to them. Contrary to this, monopolistic competition is the type of imperfect competition in which many companies have competitors, but each of them offers a slightly different or almost substitute product in the market.

Comparison chart

Monopoly monopolistic competition
Definition Monopoly is the type of imperfect competition in which a seller or producers captivate the majority of the market since the products or services of close substitutes are not available to them. Monopolistic competition is the type of imperfect competition in which many companies have competitors, but each of them offers a slightly different or almost substitute product in the market.
Products In monopoly, the firm or company offers unique services and products. In monopolistic competition, each of the sellers offers close substitutes.
Number of producers In monopoly, the only seller or producer is present. In monopolistic competition, there are dozens of sellers or producers.
price control It is limited because no substitutes or close substitute products are available on the market. More control over prices by the authorities.
What is monopoly?

Monopoly is the type of imperfect competition that prevails in the economic market when sellers or producers sell unique products or services to buyers. No other company is offering the close substitute or substitute services like them. In this type of imperfect competition, one company or firm controls the entire market on its own. The monopoly established by the companies can be quite complex and can even involve the highest government official. Due to the risk in the market, no other company produces such products even knowing the buyer’s demand. At the same time, the company takes the risk and collaborates with government officials or uses its high focus. For example, in monopoly, The company imports raw products from other countries or produces such products whose production is restricted or has strong checks and balances. The company that has ties to the superiors produces this unique product when no other company offers even close services to replace them. The company dominates the market share and enjoys higher profits.

What is monopolistic competition?

Monopolistic is the type of imperfect competition where there re many sellers and producers in the market, who are competitors to each other, but at the same time, each of them offers slightly different products instead of the perfect substitute for each other. The concept of monopolistic competition was first witnessed by the American economist Edward Chamberlin and the English economist Joan Robinson in the 1930s. High street restaurants and markets are the best example of such imperfect competition as each of them pursues the customer by offering different services and products. The product offered by each of them may be slightly different or almost a substitute, although their main objective is to catch the similar customer by offering an element of uniqueness.

Monopoly versus Monopolistic Competition
  • Monopoly is the type of imperfect competition in which a seller or producers captivate the majority of the market since the products or services of close substitutes are not available to them. Contrary to this, monopolistic competition is the type of imperfect competition in which many companies have competitors, but each of them offers a slightly different or almost substitute product in the market.
  • In monopoly, the firm or company offers unique services and products. Contrary to this, in monopolistic competition, each of the sellers offers almost substitutes.
  • In monopoly, only one seller or producer is present, while in monopolistic competition there are dozens of sellers or producers.
  • In the monopoly market, control over price is limited as there are no close substitute products available in this competition. On the other hand, in the monopoly market there is more control over prices by the authorities.

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