Which one of the following is a typical example of monopolistic compet

Which one of the following is a typical example of monopolistic competition ?

Retail vegetable markets

Market for soaps

Indian Railways

Labour market for software engineers

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This question was previously asked in

UPSC CDS-2 – 2021

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Monopolistic competition is a market structure characterized by many firms, differentiated products, and relatively easy entry and exit. The market for soaps fits this description well. There are numerous brands (firms), each offering a slightly differentiated product (based on fragrance, ingredients, marketing, etc.), and entry into the market is relatively easier compared to a monopoly or oligopoly.

– Key characteristics of monopolistic competition: Many sellers, product differentiation, free entry and exit, non-price competition (advertising, branding).
– Product differentiation allows firms to have some degree of market power (downward sloping demand curve), but the presence of many close substitutes limits this power.

– Retail vegetable markets are often closer to perfect competition (many sellers, relatively homogeneous product, very easy entry).
– Indian Railways is a government monopoly.
– Labour markets can vary significantly in structure, but a labour market for specific skilled professionals like software engineers might involve elements of oligopsony (few major employers) or competition, not typically monopolistic competition as understood in product markets.

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