Perfect and monopolistic competition have certain similarities. Both involve large numbers of sellers and buyers. As each buyer has little influence on the market price, buyers are said to be price takers. In the long-run zero economic profit will be made in both types of market due to the flexibility of entry and exit of firms to the industry. Finally, neither form of competition chooses to behave strategically as it believes any independent decisions to alter output or price will not have an effect on it's rival's actions. Fundamental differences are that monopolistic firms sell differentiated products to compete with rival firms whilst in a perfectly competitive market the combination of homogenous goods and symmetric information means each firm charges the going market price i.e. firms are price takers.
             Due to the large number of firms in both industries, each firm's choice to change output will have only a marginal change in the total industry's output. Thus firms do not behave strategically as they believe their own actions will have no effect on rival firms. To back-up this point it would be useful to look at an example. If there were 20,000 firms selling potatoes and one firm tripled their output, the total market output would only rise by 0.015% thereby having a minimal or no effect on the market price. Turning towards the demand side, the large number of buyers in both industries suggests no single consumer has the power to influence the equilibrium output and price of the market. This satisfies the assumption that in both monopolistic and perfect competition, buyers are price takers. In an extreme case it could be argued that if a large proportion of consumers all decided to stop buying a product then this would affect the market equilibrium, but for the marginal consumer this would not be the case.
             The most fundamental difference between the two forms of competition is their differently slopin...