The price-cost squeeze is:
A) a tactic used by a vertically integrated firm to raise rivals' costs of inputs, while maintaining final product prices.
B) a strategy whereby a firm temporarily prices below its marginal costs to drive competitors out of the market.
C) a strategy whereby an incumbent maintains a price below the monopoly price in order to prevent entry.
D) the act of charging a low price initially upon entering a market to gain market share.

Question

Quizplus · Accepted Answer

A price-cost squeeze involves a vertically integrated firm manipulating the costs of inputs for competitors while keeping the final product prices stable, making it harder for rivals to compete.

The Price-Cost Squeeze Is