Monopolistic competition is an industry in which many firms offer products or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors.

The following are Characteristics of monopolistic competition

• Product differentiation.
• Many firms.
• Freedom of Entry and Exit.
• No single seller dominates the market
• Independent decision making.
• Some degree of market power.
• Buyers and sellers do not have perfect information (Imperfect Information)