The difference is also due to the sticky prices since

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demand curve at the standard price. The difference is also due to the sticky prices since the marginal revenue in the market depends on price; thus, the response from rivals will have significant effects on the marginal revenue, which creates the gap. The kinked demand curve explains price rigidity in that there will be no price changes by the firms in the oligopoly market since they have fears that their revenue and profits will decrease if they do so. The rigidity is due to lack of response from rivals as other oligopolies find it irrelevant to change their price level. The kinked demand curve is associated with various shortcomings, which include the following. Firstly, the model does not explain how and why the standard price changed and grown in the first place. Secondly, the empirical evidence to support the model is feeble since there is a continuous price change in oligopoly markets than what it suggests. Thirdly, the oligopoly market assumes the firm’s behavior in response to changes in price that may not be taken by firms. Lastly, the model does not allow various forms of collusion such as price leadership and price fixing in the output level and setting of prices.
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