The other type of competition discussed in this essay is Monopolistic Competition which is also a type of imperfect competition. This type of competition is there when there are numerous suppliers for the product which is homogenous. Although the product is homogenous but there are some significant differences such as different brand names, difference in product quality, difference in product features, prices are different and etc.
Monopolistic firms have a little control over price due to the presence of large number of competitors so they also use kinked demand theory of equating marginal revenue with marginal cost. So with, little control over price they have to focus on other things such as they can choose their market dominating strategy through setting low price . Advertising at high scale, giving sales promotions , establishing public relation ,performing corporate social responsibility devotedly to get the intangible asset of Goodwill and way to differ from other firms. Consequently, amongst all of them, advertising is the most important factor because, it is the most basic way through which a monopolistic firm may differ and beat the competition.
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