Why might an oligopoly be reluctant to change its price, Microeconomics

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Why might an oligopoly be reluctant to change its price?

When some large firms have high total market share and are non-collusive, there is a strong element of interdependency. The norm will be for firms to use product differentiation, marketing and such rather than price-competition. The kinked demand curve shows how an oligopolistic firm would be reluctant to both raise and lower the price. A collusive oligopoly often breaks down because of cheating, rendering a non-collusive outcome and, again, price rigidity.

 


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