Product differentiation is a feature of the monopolistic competition market structure.
Product differentiation is a feature of imperfect competition, specifically the market structure known as monopolistic competition. In monopolistic competition, there are many firms that produce similar but slightly differentiated products. Each firm has some control over the price of its product due to product differentiation, which means that consumers perceive the products as being different from each other. This allows firms to have some degree of market power and engage in non-price competition, such as advertising or branding, to attract customers.
