Editing Monopolistic competition (section)

===Many companies===
There are many companies in each MC product group and many companies on the side lines prepared to enter the market. A product group is a "collection of similar products".<ref>{{cite book|last1=Samuelson|first1=W.|last2=Marks|first2=S.|page=379|title=Managerial Economics|url=https://archive.org/details/isbn_9780470000410|url-access=registration|edition=4th|publisher=Wiley|year=2003|isbn=0-470-00044-9}}</ref> The fact that there are "many companies" means that each company has a small market share.<ref>{{cite web|title=Imperfect Competition: Monopolistic Competition and Oligopoly|url=http://www2.harpercollege.edu/mhealy/eco211/lectures/impcomp/impcomp.htm|access-date=2020-11-01|website=www2.harpercollege.edu}}</ref> This gives each MC company the freedom to set prices without engaging in strategic decision making regarding the prices of other companies (no mutual independence) and each company's actions have a negligible impact on the market. For example, a company could cut prices and increase sales without fear that its actions will prompt retaliatory responses from competitors.

The number of companies that an MC market structure will support at market equilibrium depends on factors such as fixed costs, [[economies of scale]], and the degree of product differentiation. For example, the higher the fixed costs, the fewer companies the market will support.<ref>{{cite book|last=Perloff|first=J.|title=Microeconomics Theory & Applications with Calculus|page=485|location=Boston|publisher=Pearson|year=2008|isbn=978-0-321-27794-7}}</ref>