Price squeeze
English translation: anticompetitive SMP/dominant wholesaler pricing that "squeezes" retailers' margins
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| 22:14 Apr 18, 2007 |
| English language (monolingual) [PRO] Bus/Financial - Law: Contract(s) | |||||
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|  Selected response from: Deborah Workman United States Local time: 09:09 | ||||
Grading comment
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| SUMMARY OF ALL EXPLANATIONS PROVIDED | ||||
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| 5 +1 | anticompetitive SMP/dominant wholesaler pricing that "squeezes" retailers' margins |
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| 4 | conditions imposed on companies either by regulations or ... |
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| 3 -1 | strong price restrictions |
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| 2 -1 | impose a pricing restriction on YYY and... |
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Answers
8 mins confidence: 
peer agreement (net): -1
peer agreement (net): -1| price squeeze strong price restrictions Explanation: Well, that's what it means. But I think 'price squeeze' sounds great! |
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10 mins confidence: peer agreement (net): -1
peer agreement (net): -1| price squeeze impose a pricing restriction on YYY and... Explanation: http://financial-dictionary.thefreedictionary.com/squeeze -------------------------------------------------- Note added at 11 mins (2007-04-18 22:25:50 GMT) -------------------------------------------------- manufacturers, thus increasing costs cannot be passed onto consumers. |
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1 hr confidence:
| price squeeze conditions imposed on companies either by regulations or ... Explanation: ...by competitors, causing severe narrowing of profit margins, i.e. the products or services prices coming too close to costs. http://webapp.psc.state.md.us/intranet/Casenum/NewIndex3_VOp... http://www.ofcom.org.uk/static/archive/oftel/publications/re... -------------------------------------------------- Note added at 1 hr (2007-04-18 23:27:25 GMT) -------------------------------------------------- Examples: - a government regulation forcing manufacturers to install additional security features on their products may create a price sqeeze if the additional costs cannot be passed to consumers, i.e. if consumers don't buy the products for considerably higher prices; - a market leader, whose production costs are significantly lower that those of smaller players, may lower its prices so much as to create a price sqeeze for those smaller players. -------------------------------------------------- Note added at 2 hrs (2007-04-19 00:15:56 GMT) -------------------------------------------------- As for replacing "price sqeezing", I'd suggest something like [prohibitive] [profit] margin narrowing |
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4 hrs confidence: peer agreement (net): +1
peer agreement (net): +1| price squeeze anticompetitive SMP/dominant wholesaler pricing that "squeezes" retailers' margins Explanation: ... and so prevents fair competition See, among many other regulatory economics discusions, http://www.analysys.com/default_acl.asp?Mode=article&iLeftAr... Price squeeze Analysys provides advice to regulators, operators and new entrants on a wide range of issues relating to price squeeze. There are two main approaches used in applying a price squeeze test, namely the equally efficient operator test and the reasonably efficient entrant test. The equally efficient operator test is based on a consideration of the (efficient) costs and revenues of the significant market power (SMP) operator, to determine whether it could operate profitably if it bought the same wholesale products at the same wholesale prices as its competitors. Such an analysis would clearly demonstrate a margin squeeze situation if it established the existence of a negative margin. On the other hand, the reasonably efficient entrant test examines whether an economically efficient entrant which is not incumbent-owned would be able to profitably offer comparable retail services to those of the SMP operator, whilst using the available wholesale products. Both tests are complementary in the sense that they allow for an assessment of whether the SMP operators and the new entrants can profitably operate retail services based on the wholesale products of the SMP operator. Click here to receive a PDF presentation on the key issues surrounding price squeeze, plus an overview of Analysys's capabilities and successes. -------------------------------------------------- Note added at 2 days13 hrs (2007-04-21 12:01:07 GMT) Post-grading -------------------------------------------------- It's probably important to add that in such situations the wholesaler also has a retail activity that competes directly with the activity of the retailers who buy its wholesale product. "Price squeeze" arguments are very common in DSL markets where the incumbent phone company controls the local loop and wholesales it to competitors who provide DSL retail offerings yet also provides its own retail DSL offering. |
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