Large Number of Sellers: In monopolistic competition the number of sellers is large. Thus there is no recognised interdependence of the price-output policies of the sellers and each seller pursues an independent course of action.
Nature of Demand Curve: Under monopolistic competition no single firm controls more than a small portion of the total output of a product. No doubt there is an element of differentiation nevertheless the products are close substitutes. As a result, a reduction in its price will increase the sales of the firm but it will have little effect on the price-output conditions of other firms, each will lose only a few of its customers.