Monopolistic competition is a market structure characterized by a large number of firms producing differentiated products that are close substitutes for each other. In this market structure, firms have some degree of market power due to product differentiation, but they still face competition from other firms in the market.

The key features of monopolistic competition include:

1. Large number of firms: There are many firms in the market, each producing a slightly different product.

2. Differentiated products: Firms produce products that are similar but not identical to each other. This differentiation can be in terms of quality, design, packaging, or other features.

3. Easy entry and exit: Firms can enter and exit the market easily, which means that there is no significant barrier to entry.

4. Limited market power: Firms have some degree of market power due to product differentiation, but they still face competition from other firms in the market.

5. Non-price competition: Firms compete on factors other than price, such as quality, design, advertising, and customer service.

Monopolistic competition is common in industries such as restaurants, clothing, and consumer electronics. In this market structure, firms must constantly innovate and differentiate their products to attract customers and maintain their market share.