In economics, what is a market called when many firms sell differentiated products but entry is relatively easy?

In economics, a market with many firms selling differentiated products and relatively easy entry is called monopolistic competition.

The model explains markets in which numerous businesses compete, but their products are not identical. Differences may involve appearance, location, convenience, reputation, ingredients, customer service, or advertising. Each firm therefore faces its own downward-sloping demand curve rather than accepting one unavoidable market price.

The structure is competitive because many alternatives exist and firms can often enter or leave. It is “monopolistic” because each firm has limited control over its distinctive product. In the long run, entry can reduce economic profits as new firms attract customers.

This market structure is often contrasted with perfect competition, which assumes identical products, and oligopoly, which has only a few major sellers. Edward Chamberlin and Joan Robinson developed influential analyses of imperfect competition in 1933.