The demand curve facing an oligopoly firm is kinked because

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In an oligopoly market, firms are highly interdependent as they often compete with a few rivals who produce similar products. A kinked demand curve represents the behavior of customers who are highly sensitive to price changes. If a company raises its price, its rival will most likely match that increase to avoid losing customers, resulting in a highly elastic demand curve. However, if a company lowers its price, its rivals may not match that decrease, resulting in an inelastic demand curve. Therefore, the demand curve facing an oligopoly firm is kinked because it is most likely that rivals will match price cuts but not price increases.

The Demand Curve Facing an Oligopoly Firm Is Kinked Because