Monopolistic competition is a market structure in which firms produce a
Monopolistic Competition Monopolistic competition is a market structure in which a large number of firms produce a differentiated product and firms can easily enter or exit the industry. Each firm in the industry sells a very small portion of the market share and has very little market power.he same is true for monopolistic competition; the ease of entry and exit extends to the monopolistically competitive market. Short-Run ProfitILoss and Long-Run Equilibrium for Monopolistic Competition When a monopolistic competitor enjoys a short-run economic profit, new firms are drawn into the industry.