What type of competition occurs when a firm with many competitors tries to differentiate its product?

Monopolistic competition describes a market structure in which many firms compete by offering products that are differentiated from one another. This differentiation can occur through various means, such as differences in quality, features, branding, or customer service. In a monopolistically competitive market, each firm has some degree of market power because their product is not identical to others, allowing for some flexibility in pricing. This contrasts sharply with markets like monopolies, where one firm dominates, or oligopolies, where a few firms have significant market control and may not emphasize product differences as a primary strategy. Pure competition, on the other hand, involves numerous firms selling an identical product with no differentiation at all, making it impossible for any single firm to influence the market price. Thus, the focus on product differentiation within a competitive landscape makes monopolistic competition the correct and relevant answer in this scenario.