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Under oligopoly, the firms are dependent upon each other and can't fix up price independently. But
under monopolistic competition the case is not so. Under monopolistic competition each firm acts
more or less independently. Each firm formulates its own price-output policy upon its own demand
cost.
(5) Non-price competition:
Firms under monopolistic competition incur a considerable expenditure on advertisement and
selling costs so as to win over customers. In order to promote sale firms follow definite -methods of
competing rivals other than price. Advertisement is a prominent example of non-price competition.
The advertisement and other selling costs by a firm change the demand for his product. The rival
firms compete with each other through advertisement by which they change the consumer's wants
for their products and attract more customers.
(6) Freedom of entry and exit:
In a monopolistic competition it is easy for new firms to enter into an existing firm or to leave the
industry. Lured by the profit of the existing firms new firms enter the industry which leads to the
expansion of output. But there exists a difference.
Under perfect competition the new firms produce identical products, but under monopolistic
competition, the new firms produce only new brands of product with certain product variation. In
such a law the initial product faces competition from the existing well- established brands of product.