Monopsony Flashcards
1
Q
What is a monopsony?
A
Where there is a major buyer or the buyer has the bargaining power
2
Q
What are the benefits to the firm from a monopsony?
A
Allows bigger firms to achieve purchasing EOS leading to lower average costs
Lower purchase costs bring higher profits and return from shareholders
The extra profit might be used to find capital investment or R&D
3
Q
What are the benefits to the consumers from a monopsony?
A
Consumer gain lower prices
Improved value for money
4
Q
What are the drawbacks of a monopsony?
A
Businesses may use their buying power to squeeze lower prices out og suppliers
Consumers might be faced with less choice or higher prices in long run if suppliers leave market
