Kinked Demand Curve
Reference work entry
The kinked demand curve, one of the staples of oligopoly theory, was originally formulated as a theory of price rigidity. We review dynamic game-theoretic reformulations, which give rise to a theory of collusive price determination.
KeywordsBertrand competition Collusion Cournot competition Duopoly Folk theorem Kinked demand curve Markov perfect equilibria Oligopoly Price rigidity Quick response equilibria Repeated games
JEL ClassificationsD21 D43 L11 L13
- Anderson, R.M. 1988. Quick response equilibrium. Mimeo: University of California at Berkeley.Google Scholar
- Kalai, E., and M.A. Satterthwaite. 1986. The kinked demand curve, facilitating practices and oligopolistic competition. In Imperfections and behavior in economic organizations, ed. R.P. Gilles and P.H.M. Ruys. Boston: Kluwer.Google Scholar
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