How do the assumptions of perfect competition and monopolistic competition differ?

• Production in monopolistic competition is differentiated. In perfect competition products are homogenous.

• Both models have a large number of competitors, and freedom of entry and exit.

• In monopolistic competition the demand line is downward- sloping, whereas in perfect competition it is horizontal.

• Each firm in monopolistic competition can influence its market share to some extent by changing its price relative to its rivals. This is not possible in perfect competition