What Is a Bilateral Monopoly?

Bilateral monopoly means that the seller of a product in the product market is a monopolist, and the buyer of a factor in the factor market is a monopolist. Bilateral monopoly is an extreme situation of the imperfect competition factor market, which can be regarded as a combination of buyer monopoly and seller monopoly.

Bilateral monopoly

Interpersonal

If I have the only one in the world

Buyer's monopoly

Buyer's monopoly in factor market or

Bilateral monopoly

Seller monopoly.

(I) The factor market monopolized by the buyer

Buyer monopoly means exclusive buyer. The factor supply curve faced by a monopoly firm is the supply curve of the entire social factor market, which is an upwardly sloping curve.

(1) Completely competitive factor market: manufacturers accept a given factor price, so the marginal factor cost is equal to the average factor cost, and the factor supply curve is also the marginal cost curve.

(2) The factor market monopolized by the buyer: Increasing factor input will raise the price of all factors employed. Therefore, the marginal factor cost curve should rise faster than the average factor cost (supply curve).

In a buyer's monopoly manufacturer, when MFC = MRP is in equilibrium, that is, point A, and the equilibrium amount is L1. Under perfect competition, the equilibrium point is at point B, that is, MRP = AFC (AFC = MC), and the equilibrium amount is L2, obviously the equilibrium amount of the buyer's monopoly is smaller than the equilibrium amount of perfect competition.

On the other hand, the buyer's monopoly price can be reduced to 1. Monopoly firms reduce factor prices by reducing the amount of factor inputs.

Bilateral monopoly seller monopoly

(II) Factor cities that are monopolized by the seller

Bilateral monopoly

field

There is only one seller in the factor market, which forms a seller's monopoly;

The factor demand curve faced by the seller's monopolist is the demand curve of the entire industry factor market, which is a downward-sloping curve;

The seller's monopoly does not accept the set price, but determines the factor price by controlling the supply of the factor.

Analysis 2: Under the condition of perfect competition, the equilibrium quantity of the manufacturer is at L2, and the equilibrium price is 2, that is, it is in a state of market equilibrium at the intersection A.

Analysis 3: According to the theory of MR = MC, when the seller monopolizes the manufacturer, the manufacturer is in equilibrium when the intersection of B. At this time, the equilibrium volume is reduced to L1, and the price can be raised to 1.