3.4.6 Monopsony

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    a) Characteristics and conditions for a monopsony to operate
    Monopsony is a single buyer in a market
    E.g. Network rail for track maintenance and government for teachers
    Supermarkets have monopsony power when buying produce from farmers – means they can negotiate low prices
    Assumed monopsonists are profit maximisers
    They are able to negotiate lower prices, because their suppliers have nowhere else to sell (only one buyer)
    Firms with monopsony power are able to set market price
    Most monopolies are monopsonies

     

     

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