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This is a market structure in which there are many firms selling differentiated products; there are few barriers to entry (Colander, 2004). Colander identifies the four characteristics of monopolistic competition as, “many sellers, differentiated products, multiple dimensions of competition, easy entry of new organizations in the long-run” (Colander, 2004). First is the fact there are many sellers, such as, Coke, Pepsi, 7UP, and many other smaller companies. In monopolistic competition firms will not worry about their rivals’ reactions. An example from Colander is the many types of soap: Ivory, Irish Spring, Yardley’s Old English, and so on, so when Ivory decides to run a sale, it won’t spend a lot of time thinking about Old English’s reaction...
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