Several types of competition exist in the realm of market structures. Monopolistic competition and perfect competition are two of the common types. These two market types are very different, but offer several commonalities.

Monopolistic Competition

In monopolistic competition, several or many sellers produce products that are similar, although slightly different, and each producer determines its own price and quantity. In a monopolistic competition market, the marketplace as a whole is not affected by the prices, quantities or products of the companies. When a market is considered a monopolistic competition, the market is very competitive. With a monopolistic competition market, consumers notice slight variations in products because the products are not identical. This is what causes the high competitiveness in this type of market.

Perfect Competition

A market that is considered a perfect competition market contains a large number of producers that sell a standardized product. The sellers of these goods cannot influence price, because the products sold are identical. The sellers are therefore forced to keep the prices of these goods in line with the current market prices. Customers purchasing goods that come from perfect competition find no differences at all in the products produced by all the different manufacturers.


These two types of competition are similar in several ways. One of these ways is that, with both types of competition, companies may freely enter into the markets of these goods. Companies who want to become part of either type of market are free to enter and leave as desired.

Consumer Benefits

Another way that these two types of competitions are alike is that both types often benefit the consumer. A monopolistic competition benefits the customer via competitive pricing. Consumers are free to compare similar products to find the products they prefer. Consumers are likely to buy the product that is the best quality for the best price; which does not always mean the lowest price. In the case of a perfect competition, the consumer may benefit because no matter where they purchase a certain product, the price for the product is relatively the same as it is if it were purchased at a different store. The market price is controlled by the large number of companies selling the identical products.