Monopolistic competition means that firms have downward-sloping demand oligopoly firms collude until they become monopolies firms are in perfect competition, but they collude similar to monopolies firms are in a monopoly, but they compete firms differentiate their output, which makes them price makers, but barriers to entry are low or nonexistent. Question 30 One critical characteristic of monopolistic competition is that one firm dominates the industry. a few firms compete without agreeing on price a few firms collude with each other by agreeing on price. there is one large firm in the industry, but it has no control over the price. there are many small firms in the industry.