Monopoly vs Monopolistic Competition

A 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. In contrast, monopolistic competition is a competitive market with only a handful of buyers and sellers who provide close substitutes.

A monopoly is prevalent in the markets during which a particular product in reference is offered by a single seller who does not have any competition from other sellers. He sells his uniquely designed, well-accepted product to consumers.

Monopolistic competition is a state in markets whereby a handful of sellers offer a particular product to consumers. As a result, minimal competition is created, and variants in the characteristics and quality of products are available.

Although an ideal monopoly market is hard to exist in reality, we can quote some examples from the government sector. The government-provided infrastructure like railways between cities is still under a monopoly market. The competition is nil, and product-related characteristics are all under the government’s discretion.

In the ideal markets, most consumer products are a part of monopolistic competition. There are a handful of sellers, and hence demand-supply-price patterns are elastic. We can consider examples of day-to-day needs like cosmetics, grocery products, garments, or medicines.

The key differences are as follows:

•  The monopoly and monopolistic competition are different as the basic difference is the number of players in the markets. A single seller creates a monopoly competition. At the same time, monopolistic competition requires at least two but not many sellers.
• Due to more players in monopolistic competition, there is competition in sales and prices. Monopoly enjoys the sole control of the overall characteristics of its products.
• A monopoly in the market makes it extremely difficult for new entrants and the exit of the existing player due to the good acceptability and nature of the product. In monopolistic competition, entry and exit are easy for other players, which hardly affects an economy’s overall demand and supply pattern.
• The single-player solely enjoys profits from the product’s sale under monopoly markets. A couple of sellers offer products in the other market; hence, market sales and profits are shared.
• Generally, a monopoly scenario is possible for either designer commodities or a product with little existence in the mass market. A monopolistic competition scenario is more prevalent in practicality. The products generally include consumer-related items, although recently, there has been a huge introduction to real estate, education, and hospitality industries.

Monopolistic competition is a global phenomenon prevalent in almost all market sectors. It brings in the scope of elasticity in commodity prices, and consumers can create supply patterns as per their demands. Although the monopoly is extreme and hardly exists in today's environment, it is not completely non-existent.

While monopoly is something, every company would desire, however, a thriving market should always have a healthy monopolistic competition.

This article is a guide to Monopoly vs. Monopolistic Competition. We discuss and compare the difference between monopoly and monopolistic competition (infographics). You may also have a look at the following articles: -

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