Assume that four oligopolists begin with a common price of p = $20.One of the firms lowers its price to $17.What are the other three firms likely to do,based on the theory of the kinked demand curve?

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Based on the theory of the kinked demand curve, when one firm in an oligopoly lowers its price, the other firms are likely to lower their prices to match the price reduction in order to avoid losing business to the competitor. This is because the demand curve for oligopolistic firms is perceived to be more elastic for price decreases, meaning customers are more likely to switch to competitors if their prices remain higher.

Assume That Four Oligopolists Begin with a Common Price of P