If an oligopolist's competitors follow its price cuts but ignore its price increases, the oligopolist would end up holding its price constant even if its marginal cost changes.

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This behavior is known as "kinked demand curve" theory, where the oligopolist expects competitors to match price cuts to avoid losing market share but not match price increases, leading to a situation where changing prices (either increasing or decreasing) becomes unattractive due to the asymmetric response from competitors. This results in price rigidity even when marginal costs change.

If an Oligopolist's Competitors Follow Its Price Cuts but Ignore