Monopsony Flashcards
What is a monopsony ?
there is only one buyer in the market
What are examples of monpsony ?
NHS, goverment for teaching wages and network railways
How can the NHS force down wages ?
NHS is a monopsony and they are the only buyer in the market demanding doctors. They know doctors have no choice but to accept the lower wages as they are the only buyer.
How do supermarkets act as a monopsony ? and what is it an example of
They collude together and all offer lower prices to farmers. Farmers have to accept these lower prices as they have no one else to sell their goods too. This is also an example of purchasing economies of scale as big firms offer lower prices
What is monposny power ?
Firm has a level of monpsony power where it can control wages or prices it pays
How does reducing wages and prices benefit firms ?
These would mean lower costs meaning higher profits
