Monopolistic competition differs from oligopoly in that in monopolistic competition, firms act independently while in oligopoly, firms act interdependently.

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Monopolistic competition is a market structure in which many firms sell similar but differentiated products. Each firm has some degree of market power, as it can raise the price of its product above the competitive level due to the differentiation. In contrast, oligopoly is a market structure in which a few large firms dominate the market. These firms often engage in strategic behavior, including price fixing and colluding with each other. Therefore, they must act interdependently to maintain their market power.

Monopolistic Competition Differs from Oligopoly in That in Monopolistic Competition