Importance of monopolistic competition

Monopoly competition is even one of the most common forms of market. Monopoly competition is a form of market that mixes situations in a competitive market with situations in a monopoly. In monopolistic competition, firms compete with similar, but not identical, products. Thus, the products sold can be considered substitutes, but they are not perfect substitutes. The main element of perfect competition present in monopoly competition is the free entry of firms. In other words, the sector can at all times become more competitive.