Analysis of the kink demand curve in the long run under the oligopoly market in the case of telecom sector

Abstract

The kinked demand curve theory applies only in the short run. This principle does not apply in the long run. In the short run, all factors of production cannot be replaced, and the price cannot be kept stable in the long run due to increases in production costs and demand. For this reason, kink curves are found in short run. In the long run, a sloping demand curve is not found. For this analysis, the researcher found from the study of the Indian telecom market that when a telecom company increases the price of its tariff plan, other companies follow it, due to which there is no price rigidity in the market; hence, there is no price rigidity in the long term, and at the same time, we cannot figure out which form will lead the price in the market.