Kinked Demand Curve
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Steeeve
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ECONOMICS
Market Structures
Kinked Demand Curve
Price wars avoided by a kink in demand, not just competition
2 hours ago
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Why does the kinked demand curve lead to price stability in oligopolistic markets?
Because firms expect competitors to not follow price increases but to match price decreases, creating asymmetric demand elasticity.
Because firms always collude to keep prices fixed regardless of demand changes.
Because prices fluctuate freely as firms compete aggressively in oligopolies.
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