What is a Buyer's Monopoly?

Buyer monopoly (Monopsony) refers to a market type with only one buyer and many sellers. In this case, the buyer has a monopoly. If the buyer monopolist wishes to maximize its benefits by buying products in this market, then he will buy a smaller quantity and therefore pay a lower price .

Buyer monopoly

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Buyer Monopoly (Monopsony) means

Buyer Monopoly-Related Books

(1) Buyer monopoly: Buyer monopoly means exclusive buyer.

(2) Seller monopoly: When there is only one seller in a factor market, it is a seller monopoly.

(3)

On the buyer

Buyer monopoly

Buyer's monopoly power depends on the following three factors: the supply elasticity of the seller, the number of buyers, and the buyer's goal of action.

1. Seller's supply elasticity: In a competitive market, price and marginal value are equal, but a buyer with a buyer's monopoly power can buy goods at a price lower than the marginal value. The extent to which prices fall below the marginal value depends on the elasticity of the supply curve that buyers face. If there is only one buyer in the market-a pure buyer monopolist-his buyer monopoly power will depend entirely on the elasticity of market supply. The smaller the supply line elasticity, the stronger the buyer's monopoly power.

2. There are more than one buyer in many markets. The number of buyers is also an important factor in determining the monopoly power of the buyer: When there are several oligopoly buyers, no single buyer can completely control the price. In this way, each buyer will face a fairly flexible supply curve, and the buyer's monopoly power will be weakened. However, when the number of buyers is limited, the potential of buyer monopoly power also increases.

3. In the market structure of the buyer's monopoly, the buyer's behavioral goal is a key factor affecting the price: Take grain enterprises as an example. In the era of the planned economy, corporate behavioral goals are multiple and do not take "profit maximization" as the The only goal was that the enterprise at that time could neither operate on its own, nor pay for its own profits and losses. Although the enterprise was a monopoly buyer, the monopoly power of the buyer that controlled the price was not strong.

However, after the reform, during the period of market economy, the actual administration was separated from the enterprise, so that all state-owned grain enterprises became economic entities with independent operations, self-financing, self-restraint, and self-development. Deadline for posting. However, the existing policy requires state-owned grain enterprises to open up acquisitions at a protected price, which focuses on social benefits and allows them to realize profits and assume the task of debt repayment. This is theoretically difficult to achieve. As a result of this "high" requirement, companies are forced to choose only one of them to achieve. Since debt repayment within a specified time is a rigid indicator, most state-owned grain collection and storage enterprises have made profit their preferred target. In the over-supplied food market, food companies with monopoly rights have an absolute advantage in transactions. In order to be more profitable, there must be a phenomenon of pressure and price reduction.

In short, after the reform, the monopoly buyer s behavioral goal changed from the original diversification to profit maximization. This key change has enabled grain purchasing and storage enterprises to make full use of their buyer s monopoly power to control prices.