Monopsonies

11/03/23

“What are monopsonies and where do they occur?”

It seems that almost everyone knows what a monopoly is. When a single supplier controls the entire market, all sorts of economic extraction can ensue. But what happens in the opposite situation, when there is only one buyer in a market? Well, this becomes something that economists call a Monopsony. Buyers in monopsonies can use their special position to pull prices down to their liking. These can arise from geographic constraints, government regulations, and unique consumer demands. They also tend to have lower prices coming from wholesalers and flexibility in paid wages.