Final answer:
Direct competition is the rivalry between two companies that offer similar products and services, acknowledge each other as rivals, and act and react to each other's strategic actions.
Step-by-step explanation:
Monopolistic competition refers to a market where many firms sell differentiated products.
Differentiated products can arise from characteristics of the good or service, location from which the firm sells the product, intangible aspects of the product, and perceptions of the product.
This type of competition is known as direct competition, where two companies acknowledge each other as rivals and act and react to each other's strategic actions.