6.5 Competition among rivals.
Kinked demand curve: Shows that price rises will not be matched by rivals, but price reductions will be.
 – If the firm raises its price, rivals will keep their prices constant. The firm will, therefore, lose customers when it raises prices. As a result, demand above the current market price is elastic.
– In contrast, if the firm reduces its prices, all rivals will match the price reduction. The firm will not gain more demand by reducing prices. Demand below the current market price is therefore inelastic.