kinked demand curve under oligopoly
This tries to explain the price rigidty in oligopolistic markets.
In an oligopoly market, firms are interdependent
Before we start this explanation, kindly remember the elasticity at different points on a curve.
An oligopolist faces a downward sloping demand curve but the elasticity may depend on the reaction of rivals to changes in price and output. Assuming that firms are attempting to maintain a high level of profits and their market share it may be the case that: