Sweezy (Kinked-Demand) Model Few firms in the market Each producing differentiated products Barriers to entry Each firm believes rivals will match(or follow) price reductions, but wont match (or follow) price increases Key feature of Sweezy Model a Price-Rigidity Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Sweezy (Kinked-Demand) Model • Few firms in the market  Each producing differentiated products. • Barriers to entry • Each firm believes rivals will match (or follow) price reductions, but won’t match (or follow) price increases. • Key feature of Sweezy Model  Price-Rigidity