Question

Explain the price and output determination under monopolistic competition.

Answer 1

There is no price discrimination in monopolistic competition because there are many firms in monopolistic competion selling the same product unlike in monopoly whre only one seller sells the product to many buyers.Thus the consumers have a choice of buying from another firm if there is price discrimination in one firm and thus the demand for that firm will go down.So to avoid loss, the firms will not have price discrimination.Whereas in a monopoly, there is only one seller and thus the buyers are forced to pay the different prices fixed by the firm.