What is a monopolistic competition? Monopolistic competition is a business system mixing monopoly features with open markets. A competitive monopoly market is one with the freedom to enter and to quit. However, businesses should distinguish their goods. They have thus an inelastic curve of demand and can therefore set prices. Because of freedom of entry, however, supernormal profits will allow more businesses to enter the market, leading to normal long-term benefits. Monopolistic competition is an intermediate ground between monopoly and ideal (a strictly theoretical state) competition and blends both elements. In monopolistic competition, both enterprises have the same comparatively low degree of market control. Demand is, in the long run, very elastic, so it is pricing sensitive. The economic benefit is favorable