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because oligopolistic firms are unlikely to benefit from a reduction in prices, it is something known as game theory, each firm is attempting to get the edge over their competitor, but not with prices. This is because if one firm reduces their prices, it is highly likely that the others will do the same and in the end all parties finish with the same market share as when the price war erupted; but because they reduced prices, profit is lost, with no benefit for the firm
Wiki User
∙ 12y ago
Wiki User
∙ 12y agoit is so because of non-collusive oligopoly where the firms are not in a cartel and what would be happening is that if one firm in the oligopoly increases the price no one follows but if it reduces every other firm will do that as well to match the price reduction and therefore the more responsiveness to the price will result in a kinked demand curve.
Wiki User
∙ 11y agoThe "kink" represents that there is a break in MR curve. Under this "kink", the quantity demanded is rigid while the price is flexible.
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Which market structures has a kinked demand curve in economics?
oligopoly
Which market structure is the demand curve of the market represented by the demand curve of the firm?
oligopoly
What is kinked demand theory?
kinked demand curve is the situation where by the labours become satisfied with the employment benefits,and some of them leave the job.
Who contributed the concept of Kinked Demand Curve?
Paw m. Swiji
What are the types of oligopoly?
Oligopoly is a market from where large numbers of buyers contact few sellers for the purpose of buying and selling things. The different types are a pure oligopoly, a differentiated oligopoly, a collusive oligopoly, and a non-collusive oligopoly.
Which market structures has a kinked demand curve in economics?
oligopoly
Which market structure is the demand curve of the market represented by the demand curve of the firm?
oligopoly
What is kinked demand theory?
kinked demand curve is the situation where by the labours become satisfied with the employment benefits,and some of them leave the job.
Who contributed the concept of Kinked Demand Curve?
Paw m. Swiji
What are the types of oligopoly?
Oligopoly is a market from where large numbers of buyers contact few sellers for the purpose of buying and selling things. The different types are a pure oligopoly, a differentiated oligopoly, a collusive oligopoly, and a non-collusive oligopoly.
Is Shell Oil Company a oligopoly?
Yes, competitors are 'a few' being Exxon Mobil, BP etc. Oligopolies usually have high barriers to entry, have strong control over pricing, some control over price, and advertise aggressively. They also have a 'kinked' demand curve.
The theory of the kinked demand curve does not predict the price where the kink will occur?
Refer IGNOU Block 4, Page -44
How much control does an oligopoly have over price?
faces a demand curve that is inelastic throughout the range of market demand. faces a perfectly inelastic demand curve. is a price maker. is also able to dictate the quantity purchased
Define price rigidity?
Price Rigidity is a condition where one follows a decrease in price but not an increase in price. This is due to the ability of other firms to match prices with it and it often leads to a kinked demand curve.
True or False the steeper the demand curve the less elastic the demand curve?
It is false that the steeper the demand curve the less elastic the demand curve. The steeper line is used in economics to indicate the inelastic demand curve.
Is a demand curve created from a demand schedule?
The data on a demand schedule can be plotted on a demand curve. Often, a demand schedule will be created before the creation of a demand curve, so as to allow for greater accuracy when plotting the demand curve.
What the primary difference between aggregate demand curve and individual demand curve?
aggregate demand curve is the total sum of all the individual demand curves while individual demand curve is the demand made by the single individual.
