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Differentiation

In economics, differentiation is the act of making one set of products distinct from another set of closely related products. Think Coca-cola vs. Pepsi cola.

Expanded Definition

In monopolistic competition, many sellers are selling similar products. They compete against each other by making slight changes to their products in order to make their own products stand out from the crowd. These changes can include packaging, flavor, look, construction materials, etc.

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