If a monopolistic competitor lowers the price of its product,

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If a monopolistic competitor lowers the price of its product, some customers will be drawn from its competitors, ceteris paribus. This is because consumers will be enticed by the lower price and will switch from buying from the competitor to buying from the monopolistic competitor. However, this does not necessarily mean that the monopolistic competitor is trying to drive its competition out of the market or that quality has been reduced. Losses may or may not result, depending on the specific situation. Advertising and customer loss are also not necessarily related to the price reduction.

If a Monopolistic Competitor Lowers the Price of Its Product