Monopolistic competition and economic efficiency.

Year 2000, March. One of the most important and basic economic issues is the theory of Market Structure. The meaning of economics as a science is the description and explanation of different ways of economic agencies' interactions through commodities, services, mediums of exchange like money, production processes and other in order to increase their wellbeing in a materialistic part of life. The satisfaction, although only partial, of either economic agency could not be achieved while acting …

…must pay for product differentiation. In other words, the price differential paid by the consumer (price difference between perfect competition and monopolistic competition) is the "price" of product differentiation. But of course monopolistic competition provides us many good opportunities important for our wellbeing: the lure of economic profits causes firms to develop new or improve their old products in order to compete for customers with other producers of similar but not identical goods and services.