What is the difference between competition and monopoly

Here, there are many firms and few barriers to entry. These many firms all produce similar, but slightly different products known as differentiated. These slight differences allow each firm to charge different prices, depending on their product. In the long run, firms in monopolistic markets cannot make abnormal profits. If they do in the short run, new firms will enter the market, competing away any abnormal profit.

Here we discuss the key difference between monopoly and monopolistic competition along with infographics and comparison table. You may also have a look at the following articles —. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. Free Investment Banking Course.

Login details for this Free course will be emailed to you. Forgot Password? Article by Madhuri Thakur. Difference Between Monopoly and Monopolistic Competition Monopoly is a market structure where the participant is a single seller that dominates the overall market as he is offering a unique product or service whereas a monopolistic competition is a competitive market that has only a handful of buyers and sellers that offer close substitutes to the end users.

Therefore, under the monopoly market structure, the seller is a price maker and not a price taker. Also, there are high barriers to entry and exit the market as a result not many sellers are able to enter the market. Under the Perfect Competition market structure, there are large numbers of buyers and sellers in the market and each firm is taking the same price of the product from the buyers.

Under this market structure, each firm is a price taker and not a price maker because there are low barriers to entry and exit in the market. Under perfect competition, all sellers of the product sell identical products. In this Monopoly vs Perfect Competition article, we will focus on understanding the difference between Monopoly vs Perfect Competition. A market is a platform where various buyers and sellers of a commodity meet, interact, and strike a deal on a mutually agreed price.

The number of market players is less, and there is competition among those entities. Monopoly is a single-player market. Monopolistic competition is found in a market of a small number of players. There will be necessarily more than one entity. The seller in a monopoly market does not experience any competition. Few players are present in a monopolistic market. There exists minimal competition among those players in that market. Demand and Supply. In a monopoly market, demand and supply are entirely calibrated by the firm.

It is all the more likely that it is skewed in favour of that seller. The firms do not exert control over demand and supply owing to the competition between market players. Entry and Exit. Given the nature of this market, both entry and exit are difficult. On account of competition in a monopolistic market, entry and exit are relatively easier. Product price.

The existence of a sole player in a monopoly market causes buyers to retain no control over product prices.