What is product differentiation in monopolistic competition?
1 Answer
Feb 22, 2018
Product differentiation is the means used by a firm in a monopolistic competitive market with many firms selling similar products to differentiate its product from that of other firms.
Explanation:
Product differentiation can be real or fancied. It is real when there are slight differences in the product of the firm as in taste if it is a foodstuff, or in quality etc. It is fancied if the difference is just to attract the customer and not real differentiation, for example, differences in packaging, design etc. Firms in such markets engage in active advertising to attract customers and to market their products.
