Monopolistic competition describes an industry structure combining elements of both monopoly and perfect competition. As in perfect competition, there are many sellers and entry and exit is relatively easy. However, unlike the situation in perfect competition, products are somewhat differentiated. As a consequence, each firm faces a downward sloping demand curve which gives it some power over price. In this sense the firm is like a monopolist, although the demand curve is more elastic than that of the monopolist In essence, although the product is differentiated, it does have substitutes so that the demand curve facing the firm will depend on the prices charged by rivals producing similar products.