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(Kinked demand curve) This curve illustrates price rigidity in an oligopoly setting. Since there are few firms in an oligopoly market, they are interdependent and must carefully observe each other’s actions. If one firm raises its price, others do not follow suit, causing the first firm’s sales to decline rapidly. Conversely, if that firm lowers its price, competing firms will immediately adjust their prices downward. Therefore, the firm that reduces its price cannot achieve the profit it aimed for.Under these conditions, the demand curve takes on a kinked shape. This curve, based on the work of the American economist Paul Sweezy in 1939, essentially does not explain how prices are determined in an oligopoly market. Instead, it helps to clarify the subsequent behaviors of firms after a price is established and how price stability is achieved as a result.