In a market characterized by __________, firms have some control over pricing due to product differentiation, yet many substitutes exist, resulting in competitive pressures.

In a market characterized by monopolistic competition, firms have some control over pricing because they offer products that are slightly different from one another. This differentiation can come from things like brand reputation, quality, or special features. However, because there are many substitutes available, if a firm raises its prices too high, consumers can easily switch to a competitor's product. For example, if a coffee shop raises its prices, customers might choose to go to a nearby café instead, demonstrating the competitive pressure that exists. Overall, while firms can influence their prices, they must be careful not to lose customers to other similar options.