3.4.6 Monopsony

• Monopsony


  A market where there is only one buyer and can prevent other firms from entering the market to maximise profits
• Benefits of Monopsony Power


  -Higher profits as resources can be purchased at lower prices

  -More funds for R&D

  -Purchasing economies of scales lowers costs and increases profits

  -Access highly skilled workers e.g. the NHS
• Impact of Monopsonies on Consumers

  -Lower costs may lead to lower prices

  -Fall in supply may lead to shortages or rationing e.g. the NHS

  -Quality may decrease
• Impact of Monopsonies on Employees

  -May earn higher wages as the monopsony earns higher profits

  -Suppliers will sell fewer goods as there is only one buyer which may lead to increased unemployment

  -Suppliers are forced to take lower prices and may leave the market as a result