Product differentiation implies, that buyers differentiate products of various firms differently. So they are willing to pay different prices for the products of different firms. This product differentiation gives the power to an individual firm to influence the market price on their own.
Detailed Answer:
Product differentiation or differentiated product is a distinct feature of monopolistic competition. Though the number of firms is large but their product differs in colour, shape, brand quality, durability, etc.
It has two important implications:
(i) It allows a firm a partial control over price of its product.
(ii) It causes high elasticity of demand for the firm's product owing to the availability of a large number of close substitutes.
