<P> The Kinked - Demand curve theory is an economic theory regarding oligopoly and monopolistic competition . Kinked demand was an initial attempt to explain sticky prices . </P> <P> "Kinked" demand curves and traditional demand curves are similar in that they are both downward - sloping . They are distinguished by a hypothesized concave bend with a discontinuity at the bend - the "kink ." Therefore, the first derivative at that point is undefined and leads to a jump discontinuity in the marginal revenue curve . </P>

The kinked demand curve in oligopoly is used to explain