Monopsony

• What is a monopsony?

  A single buyer of labour or a product
• How do monopsony firms influence prices?

  They can dictate prices compared to competitive markets
• Are pure monopsonies common?

  No, they are rare
• Why is monopsony power significant in certain sectors?

  Because suppliers often have limited alternatives
• How many references to monopsony were there in the Financial Times from 2003 to 2009?

  Six references
• How do supermarkets reduce costs?

  By forcing down prices paid to suppliers
• What is a consequence of strict criteria for acceptable produce?

  It leads to wasted resources and increased costs
• How do globalized supermarkets affect smaller suppliers?

  They make it difficult for smaller suppliers to compete
• What are the advantages of monopsony power in markets?

  1. Improved value for money for consumers
  2. Increased producer surplus for funding investments
  3. Counter-weight to monopolistic selling power
  4. Fair Trade initiatives improve contracts for farmers
  5. Job security for civil servants despite lower salaries
• How can monopsonies improve consumer prices?

  By passing cost savings from suppliers
• What is allocative efficiency in the context of monopsonies?

  Providing goods at market equilibrium price
• Who are typically the suppliers to monopsonies?

  Small firms with little price control
• What happens if a supplier's price is set below AVC?

  The supplier may shut down operations
• How do strict cosmetic standards affect suppliers?

  They lead to wasted produce and lost revenue
• What is the impact of rejected products on suppliers?

  It wastes resources used in production
• How do monopsony firms benefit from lower supplier prices?

  They can lower production costs and increase profits
• What is the relationship between monopsonies and allocative efficiency?

  Monopsonies can meet consumer demands efficiently
• How does monopsony power affect employee conditions?

  It creates downward pressure on wages and conditions
• What role do trade unions play in a monopsony?

  They may counterbalance the employer's power
• What is the job security situation for employees of monopsonies?

  They often have high job security
• What happens to employees of suppliers under monopsony pressure?

  They may lose jobs if prices fall below AVC