Question

multiple choice question
in the ______ model of oligopoly, firms react to price decreases but ignore price increases by other firms.

collusion model
price leadership
cost leadership
kinked - demand

Explanation:

In the kinked - demand model of oligopoly, firms believe that if they raise their prices, competitors will not follow, resulting in a large loss of market share. But if they lower their prices, competitors will match the price cuts to avoid losing customers. So firms react to price decreases by other firms but ignore price increases.

Answer:

O kinked - demand