PRICE SQUEEZE Meaning and
Definition
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Price squeeze is a term used in economics and business to describe a situation wherein a company is faced with decreasing profit margins due to a simultaneous increase in costs of production and a decrease in revenues from selling its products or services. It occurs when a company faces intense competition or regulatory constraints that prevent it from passing on increased costs to consumers.
In a price squeeze scenario, a company experiences a significant rise in input costs such as raw materials, labor, or energy while facing downward pressure on the prices it can charge customers due to market conditions or government regulations. As a result, the gap between the costs and the prices narrows considerably, impacting the company's profitability.
Price squeeze can occur in various industries, including telecommunication and energy markets, where regulators impose price controls. In these cases, the regulator limits the price that a company can charge for its services, which can lead to a situation where the costs of providing these services exceed the allowed prices, squeezing the company's profits.
Price squeeze can have serious consequences for companies, as it may result in reduced investments, job cuts, or even bankruptcy. It is a challenging situation for businesses to navigate, as they need to find ways to either reduce costs or increase revenues to restore profitability.
Common Misspellings for PRICE SQUEEZE
- orice squeeze
- lrice squeeze
- 0rice squeeze
- peice squeeze
- pdice squeeze
- pfice squeeze
- ptice squeeze
- p5ice squeeze
- p4ice squeeze
- pruce squeeze
- prjce squeeze
- prkce squeeze
- proce squeeze
- pr9ce squeeze
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- prixe squeeze
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- pricw squeeze
Etymology of PRICE SQUEEZE
The term "price squeeze" is a compound phrase that combines the words "price" and "squeeze".
- "Price", derived from the Latin word "pretium" meaning "value" or "worth", originally referred to the value or cost of goods or services. In the context of economics, it specifically denotes the amount of money or compensation required for acquiring or purchasing something.
- "Squeeze" comes from the Middle English word "esquessen", which means "to press or compress forcibly". Its usage in this context implies the exertion of pressure or constraint on someone or something.
When combined, "price squeeze" refers to a situation in which a company or entity experiences a reduction in its profit margins due to increased costs of production combined with limited ability to raise prices. In such cases, the "squeeze" refers to the pressure or constraint on the company's profitability.
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