monopolistic competition: meaning, definition, pronunciation and examples
C2+Academic / Technical
Quick answer
What does “monopolistic competition” mean?
A market structure where many firms sell differentiated products, giving them some control over their price.
Audio
Pronunciation
Definition
Meaning and Definition
A market structure where many firms sell differentiated products, giving them some control over their price.
An economic model describing a state of competition among many producers, each selling a slightly different product. While firms compete, product differentiation (real or perceived) grants them a degree of market power and price-setting ability akin to a monopoly, albeit within a competitive environment.
Dialectal Variation
British vs American Usage
Differences
No significant differences in meaning or usage between BrE and AmE. It is a standard term in economics globally.
Connotations
Neutral economic descriptor; may carry slightly negative connotations in lay political discourse implying inefficient markets.
Frequency
Used almost exclusively in academic, business, and policy contexts. Rare in everyday conversation.
Grammar
How to Use “monopolistic competition” in a Sentence
[Market/Industry] exhibits monopolistic competition.Firms compete under conditions of monopolistic competition.The theory/models of monopolistic competition suggest that...Vocabulary
Collocations
Examples
Examples of “monopolistic competition” in a Sentence
verb
British English
- The market has been moving towards monopolistically competing for years.
American English
- These industries tend to monopolistically compete through heavy advertising.
adverb
British English
- Firms in the sector behave monopolistically competitively.
American English
- The firms competed monopolistically rather than through price wars.
Usage
Meaning in Context
Business
Analysts noted the sector is a classic case of monopolistic competition, with countless brands vying for slight perceptual advantages.
Academic
Chamberlin's theory of monopolistic competition was a significant departure from the models of perfect competition.
Everyday
Rarely used. Might be paraphrased: 'All these coffee shops are basically the same but act like they're totally unique.'
Technical
In monopolistic competition, the demand curve facing an individual firm is downward sloping due to product differentiation, leading to excess capacity in long-run equilibrium.
Vocabulary
Synonyms of “monopolistic competition”
Strong
Neutral
Weak
Vocabulary
Antonyms of “monopolistic competition”
Watch out
Common Mistakes When Using “monopolistic competition”
- Using it to describe a market with only a few dominant firms (that's an oligopoly).
- Misspelling as 'monopolisic' or 'monopolystic'.
- Using it as a synonym for 'unfair competition'.
FAQ
Frequently Asked Questions
No. A monopoly has one seller with significant market power. Monopolistic competition has many sellers, each with a small degree of market power due to product differentiation.
The theory was developed independently and nearly simultaneously in the 1930s by economist Edward Chamberlin at Harvard and by Joan Robinson in the UK.
Common examples include restaurants, clothing brands, hair salons, coffee shops, and consumer software apps—markets with many firms where branding and minor differences matter.
Economic theory suggests it leads to allocative inefficiency (price > marginal cost) and productive inefficiency (firms don't produce at minimum average cost), resulting in 'excess capacity'.
A market structure where many firms sell differentiated products, giving them some control over their price.
Monopolistic competition is usually academic / technical in register.
Monopolistic competition: in British English it is pronounced /məˌnɒp.əˈlɪs.tɪk ˌkɒm.pəˈtɪʃ.ən/, and in American English it is pronounced /məˌnɑː.pəˈlɪs.tɪk ˌkɑːm.pəˈtɪʃ.ən/. Tap the audio buttons above to hear it.
Learning
Memory Aids
Mnemonic
Think of a street with many cafes (COMPETITION), but each claims to have the 'best' unique blend or cosiest atmosphere (giving it a small MONOPOLY on that specific appeal).
Conceptual Metaphor
MARKET AS A BATTLEFIELD WITH UNIQUE WEAPONS (Each firm fights with its uniquely designed product/brand as its weapon.)
Practice
Quiz
What is a necessary condition for monopolistic competition?