Although the market price is determined by demand and supply forces in the market, monopolistic firms exercises partial control over price. They create a differentiated image of its product in the consumers' minds by incurring heavy selling costs. Products are differentiated on the basis of brand, size, colour, shape, etc. Consumers are attracted to buy a product of a particular brand even at a relatively higher price. A monopolistic firm, therefore, exercises neither full nor zero control but partial control ove. price.

Values that a seller must consider while dealing under 'Imperfect Competition' are:
(I) Value of advertisement
(II) Value of sales technoque
(III) Value of price fixation

Cooperative oligopoly is the one in which the firms co-operate with each other in determining the price.They follow a common price policy and do not compete with each other.Non -cooperative oligopoly,on the other hand,is one in which the firms act independently.They compete with each other and independently determine the price of their products.

Oligopoly firms are significantly affected by each other's price and output decisions. If a firm increases the price of its product with the motive of earning higher profits, the other firms will not follow. Consequently, the leading firm will lose its customers to the firms, which charge lower price. On the contrary, if firm lowers its price for maximising sales and earn higher profits, the other firm may also reduce their price in response. Consequently, the increase in total market sales is shared by all the firms in the market. The leading firm that initiated selling at a lower price may actually receive smaller share of the increase than expected. Thus, the oligopoly firm has to take into consideration the actions and reactions of its rivals while taking its price and output decisions.

Product differentiation implies that the product sold by different firms are similar but not identical.Their products differ in terms of colour,shape,quality, durability,etc.This gives an individual firm some monopoly power,that is, the power to influence the demand for its product by changing price, Buyers can easily differentiate between the products produced by different 6 firms.

Three main features of monopolistic competition are:
(i) Large number of sellers and buyers
(ii) Free entry and exit in the long run
(iii) Product differentiation
Product Differentiation: In monopolistic competition, each firm produces a brand or variety (of the same product) that is unique, i.e., different from what any other firm produces. The varieties produced are very close substitutes of one another. Products like toothpaste, soap and lipstick are prominent examples.

The three main features of a monoploy are:
(i) A single seller
(ii) No close substitutes of the product
(iii) Monopoly firm is a price maker
Single Seller: In monopoly market structure,there is a single firm that produces the good or services for which there no close substitutes.A firm is an entire industry.The market demand curve is the curve facing the firm and market supply is the amount that the firm decides to produce . Thus monopoly firm has a complete control over the prices.

A monopolistic firm has differentiated products; thus, it has to lower its price in order to increase its sales. Further, the products of different monopolistic firms are close substitutes to each other. Hence, the demand for all the products is elastic. For this reason, the demand curve is negatively sloped.

Following are the different ways in which oligopoly firms may behave:
(i) Oligopoly firms may collude together and decide not to compete with each other in order to maximise total profits of the firm.In such a case,the firms behave like a single monopoly firm that has two different factories producing the same good.
(ii) Oligopoly firm may seek to maximise profit on the basis competitor's price and output decisions.
(iii) Oligopoly firms may incur huge expenditure on advertising so as to influence consumers mind towards their particular product and increase market share.

The long run time horizon is featured by the free entry and exit of firms. If the firms in the short run are earning abnormal or super normal profits, then, new firms will be attracted to enter the market. Due to the new entrants, the market supply will increase. It leads to the reduction in the price that ultimately falls sufficiently to become equal to the minimum of average cost. When the market price is equal to the minimum of AC, it implies that all the firms earn normal profit or zero economic profit.
On the contrary, if in the short run the firms are earning abnormal losses, then the existing firms will stop production and exit the market. This will lead to a decrease in the market supply, which will ultimately raise the price. The price will continue to rise until it becomes equal to the minimum of AC. ‘Price = AC’ implies that in the long run all the firms will earn zero economic profit.
Hence, when the price is equal to the minimum of AC, neither any existing firm will exit nor any new firm will enter the market.

Non-collusive oligopoly is the one in which the firms act independently. They compete with each other and independently determine the price of their products. Collusive oligopoly, on the other hand, is the one in which the firms co-operate with each other in determining the price. They follow a common price policy and do not compete with each other.
(i) Few Firms: Under oligopoly there are only a few firms and large number of buyers. A few firms have complete control on the production of the good in the market. For example, in automobile manufacturing, only 4 firms viz. Maruti, Hyundai, Ford and Tata have captured the largest share of production in the market.
(ii) Non-Price Competition: Under oligopoly there is a non-price competition. If the firms enter into price competition, called price war, it benefits only consumers, not the firms. Thus, the firms usually avoid price wars and try to attract consumers through different non-pricing strategies such as aggressive advertising, product bundling, branding, offering incentives and rebates, etc.

(i) In monopolistic competition, the products of various firms differ in terms of colour, shape, quality, durability, etc. Product differentiation implies that the products sold by different firms are similar but not identical. This gives an individual firm some monopoly power, that is, the power to influence the demand for its product by changing the price. Buyers can easily differentiate between the products produced by different firms.
(ii) There is large number of sellers under perfect competition. All sellers sell such an insignificant portion of the total market supply of the commodity that none of them is in a position to influence the prevailing market price. The price of the product under perfect competition is determined in the industry by the market forces of demand and supply. An individual firm is merely a price taker and not a price maker.