The monopsony, also known as the monopoly of the buyer, it is a market structure where there is a single applicant or buyer. There may be one or more bidders, and that is why the market is classified as imperfect competition.
Characteristics of the monopsony
It is a somewhat special economic activity, since that single market demander faces a positively sloping supply curve. This means that since it is the only applicant, it has greater market power and the many suppliers must adapt to its demands. The higher the quantity of the product you want to buy, the higher the price you have to offer.
This situation is different from a market where there are more buyers, since they are accepting prices and face a flat supply curve. This means that they can buy the quantity they want at the current price, without having to influence it.
Monopsony is a condition within the market where the absolute power of a product, so to speak, is held by a single buyer. Generally, this type of action occurs when certain factors of production demand specialized jobs, materials or goods in process.
Also the higher the elasticity that is presented in the offer of the desired product, the ability to affect the price will be much less. Being a type of market classified as imperfect, conflict situations have often arisen between buyers and sellers.
Monopsony has advantages. There are several and we have mentioned them previously. The elasticity, the applicant can get to seize part of the surplus of the offeror, exercise great control in the market and the demands that will be proposed by the buyer. But it also has its negative side, and especially for the market, the buyer and the monopsonists.