Explain the Kinked-Demand Curve (Sweezy’s) model of oligopoly. Why does this model conclude that oligopolists are reluctant to compete with each other on the basis of product price?
In connection with the predicted outcomes from the kinked-demand model, McGuigan offers six different strategies that oligopolists can use to aviod the profit-reducing effects of price wars. Fully describe three of McGuigan’s suggested alternatives to direct price competition.