Monopsony

Monopson refers to a market structure where a single buyer has significant control over the market, influencing the prices and terms of transactions.




The monopsonist wields substantial power over suppliers, often dictating prices and wages.



With only one major buyer, competition is diminished, leading to potential inefficiencies.



Prices may be lower than in competitive markets as the monopsonist seeks to maximize their own benefit.





A company that employs many workers in a small town might be the sole employer, thus having monopsonistic power over wages.



A large manufacturer might be the only buyer of a specific raw material, allowing it to negotiate lower prices.