Oligopoly Diagram Economics. There are different diagrams that you can use to explain 0ligopoly markets. The kinked demand curve model makes a prediction that a business might reach a stable profit maximising equilibrium at price p1 and output q1 and have little incentive to alter prices.
An industry which is dominated by a few firms. In this article we will discuss about collusive oligopoly and how is price determined in this oligopoly. The demand curve faced by the leader firm of the oligopoly industry is determined for any price it is the horizontal distance between industry demand curve d t and the marginal cost curves of all small firms mc s.
The kinked demand curve model predicts there will be periods of relative price stability under an oligopoly with businesses focusing on non price.
Collusive oligopoly in economics with diagram article shared by nipun s. The kinked demand curve model makes a prediction that a business might reach a stable profit maximising equilibrium at price p1 and output q1 and have little incentive to alter prices. Is there a stable profit maximising equilibrium in this model. In the kinked demand curve model the firm maximises profits at q1 p1 where mr mc.
