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The Kinked-Demand curve theory is an economic theory regarding oligopoly and monopolistic competition. Kinked demand was an initial attempt to explain sticky prices. Theory
An oligopoly (from Ancient Greek ὀλίγος (olígos) 'few' and πωλέω (pōléō) 'to sell') is a market in which pricing control lies in the hands of a few sellers. [ 1 ] [ 2 ] As a result of their significant market power, firms in oligopolistic markets can influence prices through manipulating the supply function .
In order to distinguish themselves well, these firms can compete in price, but more often, oligopolistic firms engage in non-price competition because of their kinked demand curve. In the kinked demand curve model, the firm will maximize its profits at Q,P where the marginal revenue (MR) is equal to the marginal cost (MC) of the firm.
An oligopoly may engage in collusion, either tacit or overt to exercise market power and manipulate prices to control demand and revenue for a collection of firms. A group of firms that explicitly agree to affect market price or output is called a cartel , with the organization of petroleum-exporting countries ( OPEC ) being one of the most ...
Oligopoly: The number of enterprises is small, entry and exit from the market are restricted, product attributes are different, and the demand curve is downward sloping and relatively inelastic. Oligopolies are usually found in industries in which initial capital requirements are high and existing companies have strong foothold in market share.
Meaning: If you aren't weighing yourself at a consistent time each day, expect to see different numbers on the scale. Eating or drinking anything adds weight, even the healthy stuff.
English: A diagram illustrating kinked demand, one formulation for explaining price stability in oligopolies.The demand curve the oligopolist faces is that of two separate curves spliced together, creating a discontinuity in the MR curve.
Dassai – meaning “otter festival” in Japanese – is one of the most popular sake brands on the market. But its maker is also behind premium products popular with collectors willing to spend ...