The kinked demand theory attempts to explain why an oligopolistic firm:

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The kinked demand theory suggests that an oligopolistic firm faces two demand curves - one for price increases and one for price decreases. The demand for price increases is relatively elastic because if the firm increases its price, its competitors will not follow suit, and the firm will lose a significant number of customers to its rivals. On the other hand, the demand for price decreases is relatively inelastic because if the firm decreases its price, its competitors will likely follow suit, and the firm will not gain many additional customers. Therefore, the firm is hesitant to change its price frequently, leading to infrequent changes in price.

The Kinked Demand Theory Attempts to Explain Why an Oligopolistic