Examples of monopsony’s are generally in the labour market – where there is one company with many workers that want to sell their labour.A monopsony is where there is only one buyer of a good or service.Quite simply, it is an economic transaction where there is only one buyer, but many sellers. A monopsony doesn’t just refer to the purchase of goods, but also services such as labour. However, the people of the town have no other option than to work for the company if they want an income.

For example, a small town may have a large manufacturer that it relies on for employment. In turn, these two terms create the word ‘monopsony’ which simply means one buyer.Ī monopsony is where there is only one buyer of a good. We then have the second part, the word ‘opsōnéō’, which means ‘to buy’. The first of which is the term ‘Mono’, meaning ‘one’. The term ‘monopsony’ is of Greek origin and comes in two parts. This contrasts with the similarly named monopoly, whereby there is only one seller and many buyers.

In turn, the buyer, the supermarket, is able to exert power over such suppliers who have nowhere else to go. Farmers may only have the option to sell to the local supermarket as it’s unpractical to sell to the next closest one. For example, supermarkets are often seen to have a monopsony over local suppliers. Paul Boyce Posted in Microeconomics > Market StructureĪ monopsony is where there is a sole buyer of a product, with many sellers.

Real world monopoly examples