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Why is price relatively stable in the kinked-demand model?
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Kinked demand curve theory is used to explain some of the behaviours of firms that exist in an oligopolistic market. This video discusses how the kinked demand curve is constructed and how it illustrates non-price competition. This video is part of a free online lesson that guides A-Level Economics and IB Economics students through everything they need to know about oligopoly. This online lesson also includes some great revision activities and exam-style questions. Access the online lesson here
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Would you expect the kinked demand curve to be more extreme (like a right angle) or less extreme (like a normal demand curve) if each firm in the cartel produces a near-identical product like OPEC and petroleum? What if each firm produces a somewhat different product? Explain your reasoning. | Numerade
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