In the kinked-demand model of oligopoly, if one firm increases its price, the most likely reaction of the other firms will be to
A)decrease their prices.
B)increase their prices.
C)not change their prices.
D)reduce their quantity.

Question

Quizplus · Accepted Answer

In the kinked-demand model, if one firm increases its price, other firms are likely to not change their prices, as they assume that the firm increasing its price will lose market share to them.

In the Kinked-Demand Model of Oligopoly, If One Firm Increases