Product Differentiation: Refers to distinguishing one firm's product from another through marketing or physical characteristics such as quality, design, packaging, or branding. In the fast-food industry, product differentiation can be seen in the unique recipes and branding of each restaurant.
Market Power: Represents a firm's ability to influence market conditions, particularly price. Monopolistically competitive firms have some degree of market power, allowing them to adjust prices based on consumer demand and competition.
Nonprice Competition: When firms compete with each other through means other than price, such as advertising, product quality, or customer service. Fast-food chains engage in nonprice competition by emphasizing their unique offerings rather than engaging in price wars.