3.4 - Monopsony Flashcards
1
Q
What is monopsony power within a market?
A
Firm with significant purchasing power
Single lead buyer
Able to negotiate lower prices with supplier
2
Q
How does monopsony power lead to improved profitability?
A
Strong bargaining power
Able to negotiate lower input costs
Margins become more profitable
3
Q
What are the benefits to the firm?
A
Purchasing EoS
Increased profits + shareholder returns
Profits fund capital investment, R + D
4
Q
What are the benefits to consumers?
A
Lower costs may be passed on
Improved value for money
5
Q
What are the general drawbacks of monopsony power?
A
Lower supply chain profits + income
Threat of business closure
Consumers may face higher prices + reduced variety if suppliers are lost
