Monopolistic Competition

Monopolistic competition is when a market has many sellers, each of whom has a unique product to sell. As the name suggests, the market is like competition, because there are many sellers. But it is also like a monopoly, because no two sellers offer the same good. Restaurants are an example of monopolistic competition. A city has many restaurants, and entry and exit is frequent. But all restaurants differ, and do so along various dimensions, including location and the style and quality of food served.