Which market structure involves many companies selling similar but not identical products?

Monopolistic competition is characterized by a market structure where many companies operate and sell products that are similar but not identical. In this type of market, firms differentiate their products through factors like branding, quality, features, and customer service. This differentiation allows companies to have some degree of market power, meaning they can influence the prices of their products to a certain extent, unlike in perfect competition where products are identical and firms are price takers.

In a monopolistically competitive market, there are typically low barriers to entry, which encourages new firms to enter the market easily, thus maintaining a competitive environment. Consumers benefit from a variety of choices, and while firms compete on price, they also compete on how they can differentiate their offerings to attract more customers.

In contrast, other market structures like perfect competition involve identical products with many producers having no control over pricing, while an oligopoly consists of a few firms that dominate the market, leading to interdependent pricing and production decisions. A monopoly is characterized by a single seller that controls the entire market, offering no competition or variety in products.