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The Kinked Demand Curve Confronting an Oligopolist. The shape of the demand curve facing an oligopolist thus depends on how its rivals responded to a change in the price of its own output. The demand curve will be kinked if rival oligopolists match price reductions but not price increases. 36 RecallThe Starting Point Industry marginal cost Jan 06, 2009 · Kinked demand curve is one of the reasons why oligopolies keep their prices more stable though it is not a sole reason. One of the other explanations might be so called menu costs, the price of changing the cost of a product, e.g. reprinting menus at a restaurant, changing price labels at supermarkets, etc.

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