Two companies, Hallmark and American Greeting, dominate the greeting card industry in the United States. It is likely that these one of these companies will experience a(n) _____

Question

Quizplus · Accepted Answer

Given the dominance of Hallmark and American Greeting in the greeting card industry, it's likely they face a kinked demand curve. This is because in oligopolistic markets, where a few firms dominate, the price movements of one competitor are closely watched and often matched by the others, leading to a situation where demand is elastic for price increases (consumers are sensitive to price increases and may switch to the competitor) and inelastic for price decreases (a price decrease does not significantly increase market share because competitors match the decrease). This creates a "kink" in the demand curve at the current price level.

Two Companies, Hallmark and American Greeting, Dominate the Greeting Card