Monopolistic competition and non-price competition

This chapter investigates the features of monopolistic competition, and the implications of this market structure for customers and firms. It describes the short-run price and output decisions of a monopolistically competitive firm and the efficiency of monopolistic competition using diagrams. Then, it examines the non-price competition which are experienced in many markets. The chapter introduces Porter's five forces analysis and shows how firms try to influence these forces. Finally, the meaning and significance of contestable markets are tackled.