The kinked demand curve is based on the idea that

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The kinked demand curve model assumes that firms will be able to sell more units of their product at the existing price than they would be able to sell if they increased the price, but that they would lose a significant amount of sales if they were to lower the price. Therefore, firms may be hesitant to change their prices, leading to a kink in the demand curve at the current price point. This means that if a firm were to lower its price, other firms in the market are likely to follow and the firm will not gain many additional sales. Conversely, if a firm were to increase its price, other firms are likely to maintain their existing prices, and the firm would lose a significant number of sales. Therefore, firms are more likely to maintain the status quo and leave their prices unchanged.

The Kinked Demand Curve Is Based on the Idea That