Despite the importance of understanding and predicting competitive rea
ctions in oligopoly theory, empirical research on the topic is sparse.
We examine whether retail decision-makers' pricing reactions conform
to the asymmetric conjecture specified in the classic kinked demand cu
rve theory: that firms will tend to follow competitors' price cuts but
not follow price increases. Factors which likely moderate this reacti
on pattern are discussed and examined via a survey which presents mana
gers with a case study in which they must determine whether or not to
respond to a competitor's pricing initiative. The results do generally
support the theory's assumption about pricing reactions, but also ind
icate that reactions are moderated by item price sensitivity and influ
enced by the behavior of other competitors in the market. Response to
price cuts is immediate in some cases, but response to price increases
can only be motivated if other competitors follow the initiator first
. We consider why these effects vary across products and how market le
arning may be inhibited by certain reaction tendencies.