Economics Oligopoly Questions
The price squeezing model in oligopoly refers to a situation where a vertically integrated firm with both upstream and downstream operations uses its market power to manipulate prices in order to squeeze out competitors. This occurs when the firm sets a high price for its upstream product (input) and a low price for its downstream product (output), making it difficult for independent firms operating only in one segment of the market to compete. This strategy allows the vertically integrated firm to maximize its profits and maintain dominance in the industry.