The kinked demand curve explains why prices can be sticky

Reference no: EM13684674

1. Explicit collusion is illegal in the U.S. but implicit price collusion is possible and does occur. Give a fictitious example of how two companies in the same industry might collude.

2. The Kinked Demand curve explains why prices can be sticky. Give an example of two products from two dissimilar competitors that tend to not change price very often even though it is reasonable to suppose the cost to make does change fairly frequently. Why doesn’t a company simply raise its price? What might the competitor do (or not do)? Why?

Reference no: EM13684674

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