Monopsony, oligopsony
So-- I've been talking about the institutions of exchange that make for opportunities to be chosen among. I've talked about competitive, monopolistically competitive, oligopolistic, and monopolistic markets-- all about the number and market power of sellers.
But can't buyers hold market power?
Sure.
They're called monopsonistic and oligopsonistic markets, depending whether there are many or few buyers with market power.
Back in the day when this was taught, students were assured that markets where buyers had market power were few-- labor markets in "company towns," mostly.
But consider the rise of the big entrepreneurial firms-- perhaps most prominently Walmart, Costco, and amazon. They have very substantial power over the prices they pay, and I've read quite a lot about Walmart's use of it.
Much of that power comes through contracts, though, not markets. Next, I'll talk about contracts.
Facebook posts incorporated:
Market power for buyers: monopsony and oligopsony
But can't buyers hold market power?
Sure.
They're called monopsonistic and oligopsonistic markets, depending whether there are many or few buyers with market power.
Back in the day when this was taught, students were assured that markets where buyers had market power were few-- labor markets in "company towns," mostly.
But consider the rise of the big entrepreneurial firms-- perhaps most prominently Walmart, Costco, and amazon. They have very substantial power over the prices they pay, and I've read quite a lot about Walmart's use of it.
Much of that power comes through contracts, though, not markets. Next, I'll talk about contracts.
Facebook posts incorporated:
Market power for buyers: monopsony and oligopsony