Explain the behavior of firms in an oligopoly market where competitors follow price decreases but not price increases.

Firms in an oligopolistic industry sell similar, yet not identical products. They often engage in non-price competition, such as product innovation and advertising. Since the products they sell are similar, they follow a price leadership model. Under this model, when a firm chooses a price, it will be copied by the other firms. If a firm chooses a price higher than its competition, consumers will not buy it and that firm will lose revenue. If a firm chooses a price lower than the other firms, the other firms will copy that price so they do not lose revenue. This is why you will typically see similar prices in oligopolistic markets such as US domestic automobiles, US domestic air travel, and breakfast cereal.