Since we live in a society were the five elements of pure competition are not available to us, then we are clearly operating in a state other than pure competition. Instead we operate under a different model of competition known as monopolistic competition. Any time the elements of pure competition are not met the existing model is monopolistic competition. The fundamental difference between a pure competitor and a monopolistic competitor is that the latter refrains from selling identical products. By employing product differentiation , the monopolistic competitor is trying to establish a comparison between its product and another competitors product.
Product differentiation is when manufacturers make design changes to basically identical products.
An example might be the Big Mac and the Whopper. McDonalds and Burger King market them as totally different products in an attempt to make their product appear different and better. Instead of competing based upon price, we are competing based upon features. This is known as non price competition . This non price competition is rampant throughout our economy.