The main features of monopolistic competition are as follows: 

(a) Large number of buyers and sellers: The number of sellers in the monopolistic competition is large but when compared to perfect competition it is less. Every firm decides its own price and quantities to be produced. The number of buyers is also large.

(b) Product differentiation: Product differentiation is the main feature of monopolistic competition. Product differentiation means, the products in monopolistic competition are different in quality, size, shape, colour, packaging, odour etc. So, the products sold in this market are not heterogenous.

(c) Existence of selling costs: Selling costs are the unique feature of monopolistic competition. Selling costs are those costs which are incurred by the producer on marketing of products. The selling costs include advertisement, salesmanship, publicity, attracting packaging etc. The intention of incurring selling costs is to attract the consumers.

(d) Free entry and exit: There is no restriction on entry of new firms and exit of old firms. The product differentiation attracts new firms into the industry.

(e) Downward sloping demand curve: The demand curve in a monopolistic competition which, represents Average Revenue line, slopes downwards. Here, a single firm cannot control the entire market supply. A reduction in price leads to increase in demand and increase in Average Revenue and rise in price leads to fall in demand and decrease in Average Revenue.

(f) Price Maker: As the products produced by each firm is differentiated in brand, shape, size, package, quality etc., the firms in monopolistic competition fix their own price. Therefore, every firm enjoys monopoly power on its own product.