Similarities:

The following are the points of similarities between the two market
situations:
(1) Both in monopoly and monopolistic competition the point of equilibrium
is at the equality of MC and MR and the MC curve cuts the MR curve from
below.
(2) In both, the demand curve (AR) slopes downward to the right and the
corresponding marginal revenue curve is below it.
(3) In both situations the equilibrium point is below the price line (AR).
(4) In both, there is excess capacity. In other words, the demand curve
(AR) is not tangent to the long-run average costs curve at its minimum
point.
(5) In both market situations, the producer is a price-maker. He can raise or
lower the price.

Dissimilarities:

There are, however, more dissimilarities than similarities in monopoly

and monopolistic competition which are as under:
(1) There is only one producer of a product under monopoly while there are
a number of producers under monopolistic competition.
(2) There is no difference between firm and industry under monopoly. The
monopoly firm is the industry. On the contrary, there are many firms in
monopolistic competition and the industry is called a group.

(3) Only a single product is produced under monopoly and there is no

product differentiation. Under monopolistic competition every producer
produces differentiated products. Products are similar but not identical.
They are close substitutes rather than perfect substitutes. They differ from
one another in design, colour, flavour, packing etc. As a result, there is
product differentiation.
(4) There are no selling costs in monopoly because the monopolist has no
competitor. However, when the monopoly firm is established, the
monopolist may spend some money on advertisement to acquaint the
consumers about his product. But he will spend on advertisement only
once. On the other hand, due to large number of firms and existence of
competition among them, expenditure on selling costs is essential under
monopolistic competition.
(5) The monopolist can charge different prices from different customers for
the same product and can adopt the policy of price discrimination. But price
discrimination is not possible under monopolistic competition due to the
presence of competitive element in it.
(6) There being no close substitutes of the product under monopoly, the
demand for his product is less elastic. Therefore, the demand curve of the
monopolist is steep, i.e. less elastic. On the contrary, products are close
substitutes under monopolistic competition. As a result, the demand for the
product of every firm is more elastic and its demand curve is flat.
(7) The inference can be drawn from the above analysis that the monopoly
price is higher than the price under monopolistic competition. Moreover, the
monopolist has more freedom in fixing the price for his product than the
monopolistic competitor.

(8) Firms can enter and leave the group under monopolistic competition in
the long run because the element of competition is present in this market
situation. Since the monopolist has full control either over the price or the
supply, no firm can enter the monopoly industry.
(9) There being no fear of entry of new firms in monopoly, the monopolist
earns super-normal profits even in the long run; whereas firms earn only
normal profits in the long run under monopolistic competition because the
firms can enter and leave the group.