Oligopsony

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In microeconomics an oligopsony is a market form where there are few buyers. There may be many sellers, but because there are few buyers, the decision each buyer makes influences the whole market. Therefore this is an example of imperfect competition.[1]

Oligopsony works just like oligopoly involving a few number of sellers. This market has a few big buyers willing to buy a product or service. The number being limited enables the purchasers to have a sense of control over the sellers, and lets them negotiate with product prices.

One example of this is the market for cocoa: Three companies (Cargill, Archer Daniels Midland and Callebaut) buy most of the world production, usually from small farmers. Other examples are that of tobacco or that of bananas. By extension the "market for work" also has this characteristic: there are few companies (employers, "buying work") and many people "offering to work".

References[change | change source]

  • Bhaskar, V., A. Manning and T. To (2002) 'Oligopsony and Monopsonistic Competition in Labor Markets,' Journal of Economic Perspectives, 16, 155–174.
  • Bhaskar, V. and T. To (2004) 'Oligopsony and the Distribution of Wages,' European Economic Review, 47, 371-399.
  1. "What Is an Oligopsony?". Investopedia. Retrieved 2021-10-09.