Thursday, 8 June 2017
20 Facts About Monopsony
ü A monopsony is a situated in which there is only one buyer for a product i.e. monopsony is a market structure characterized by a single buyer and many competitive sellers.
ü Like the monopolist, the monopsonist seeks to maximize his profit given the quality of inputs purchased
ü The monopsonist purchases the unit of input (which is labour) in the competive market (which is the labour market) based on its price.
ü The monopsonist cannot purchase unlimited amount of input (which is labour) at a uniform price because price paid for unit of input is derived from the market supply curve of the input (which is labour)
ü Monopsony is viewed under an economic theory of buying and selling.
ü Monopsony falls among the lists of imperfect competitive market theory
ü Other families of monopsony are (i) monopoly (ii) oligopoly (iii) oligopsony (iv) duopoly (v) duopsony
ü Monopoly is a market structure characterized by one seller and many competitive buyers
ü Oligopoly is a market structure characterized by few seller and many competitive buyers
ü Oligopsony is a market structure characterized by few buyer and many competitive sellers.
ü Duopoly is a market structure characterized by only two sellers and many competitive buyers.
ü Duopsony is a market structure characterized by only two buyers and many competitive sellers.
ü The monopsonist always witnesses no direct competition within its existing market.
ü Monopsony is affected by the force of demand and supply.
ü Price, product, distribution and promotion are vital elements of monopsony.
ü Monopsony is considered to be Pareto inefficient as proven by experts in economics.
ü Monopsony is a market structure that doesn’t assure the dissemination of perfect information.
ü Monopsony suffers in the face of input scarcity (which is scarce labour) but thrives in the face of input surplus (excess labour).
ü Within monopsony, price undercutting may be practiced often.
ü Monopsonistic market doesn’t witness the emergence or existence of cartel.
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