A firm in a pure competition competitive structure can reposition itself as being in a monopolistic competition competitive structure through a differential advantage.

Question

Quizplus · Accepted Answer

In a pure competition structure, firms sell homogeneous products, but by creating a differential advantage—such as through product differentiation, branding, or quality improvements—a firm can reposition itself in a monopolistic competition structure where firms sell products that are not perfect substitutes, allowing for some degree of market power.

A Firm in a Pure Competition Competitive Structure Can Reposition