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What is a monopsony market
occurs when there is only one seller in a market, a pure monopsony market occurs when there is only one buyer in the market
said to have considerable buying power and can, to some extent, be the ‘price setter’ in the market
Conditions required for a monopsony power to occur
single firm buys most/all output in a market
sellers have few/zero alternative buyers to trade with
medium-to-high barriers to entry exist which prevent new firms entering the market
Characteristics of a monopsony market
buyer will usually gain a discount
lower price may force some producers out of the market
producers complain about earning only a small profit, delays in getting paid ‘unfair’ working conditions
workes, when faced with a single, powerful buyer of its labour, may form a Trade Union
What are the benefits of a monopsony market
firms can earn higher profits
the price of the final product may be lower
buyer may. need to counter to power of a monopoly
Costs of a monopsony market
seller recieve low price, delayed payment and unfair working conditions
sellers earn low profits
some sellers will likely leave the market
sellers are more vulnerable to the buying power of a monopsony firm when their product is perishable
Government policies to protect suppliers from monopsony power
minimum price
laws forcing buyers to pay their suppliers within a set time limit
govt introduce policies to make it more compeitive
govt could nationalise the monopsony firm to ensure producers recieve a fair price
