Explain the phenomenon of sticky prices In an oligopolistic market

The concept of "sticky prices" relates to conditions when the market price remains the same (i.e. hence the "sticky" term) despite there being new factors in the market that would otherwise suggest a different optimal price.

• Let's use the example of the airline industry in order to illustrate sticky prices in an oligopoly. From 2008 to 2020, the price of oil has decreased by almost 75%. The fuel used on the airplanes is one of the primary costs incurred by airlines. Given this information, we would expect airfares to drop significantly since firms can compete more. However, airplane tickets have remained fairly stable, only with a slight decline in prices if any at all. This illustrates how an oligopoly has more control in the market plane (i.e. if all companies agree not to lower prices, then there is to need to lower them).