What is Monopolistic Competition?

Monopolistic competition is a form of market which can be characterized by
huge number of sellers who are selling differentiated products. It mixes the features of monopoly and perfect competition. The products are differentiated in the sense of brands or trademarks.
Examples of monopolistic competition would be the smart phone market or the toothpaste market or the soap market. All these markets have a large number of producers and sellers but the products are not homogeneous. The competition arises due to great number of firms while monopoly is given to them by the trademarks and copyrights.
Let us consider the smart phone market. This market has expanded on a large scale and thus a large number of competitors have come up. The following image shows how the popular brands have a significant yet limited share in the market. They have to undertake continues innovations in order to attract the customers.