Economics Oligopoly Questions
Price squeezing in oligopoly refers to a situation where a dominant firm in the market, typically the vertically integrated firm, reduces the price it charges for its final product while simultaneously increasing the price it charges for an essential input or intermediate product. This strategy aims to squeeze out or eliminate competition by making it difficult for rival firms to compete on both the input and output sides of the market. As a result, the dominant firm can maintain or increase its market share and profitability.