Oligopsony definitions
| Word backwards | ynospogilo |
|---|---|
| Part of speech | Noun |
| Syllabic division | ol-i-gop-so-ny |
| Plural | The plural of the word oligopsony is oligopsonies. |
| Total letters | 10 |
| Vogais (2) | o,i |
| Consonants (6) | l,g,p,s,n,y |
Oligopsony is a market structure where a few buyers control the majority of the purchases of a particular product or service. This situation gives the buyers significant power to influence prices and dictate terms to suppliers.
Oligopsonies can lead to reduced competition among suppliers since there are only a few buyers in the market. This can result in lower prices paid to suppliers, lower quality products, and reduced innovation as suppliers have less incentive to invest in research and development.
Effects on Suppliers
Suppliers in an oligopsonistic market may find themselves at a disadvantage as they have limited options when it comes to selling their products or services. This can lead to a lack of bargaining power, forcing suppliers to accept lower prices and unfavorable contract terms.
Impact on Consumers
While oligopsonies may result in lower prices for consumers in the short term, they can also lead to reduced product variety and quality over time. Additionally, the concentration of power in the hands of a few buyers can limit choices for consumers and stifle competition.
In conclusion, oligopsonies have significant implications for both suppliers and consumers in a market. Regulators often monitor such market structures to ensure fair competition and protect the interests of all parties involved.
Oligopsony Examples
- The agricultural sector is vulnerable to the influence of oligopsony, where few buyers control the market.
- In a small town, several restaurants may operate in an oligopsony situation where only a few suppliers provide ingredients.
- The tech industry is often criticized for its oligopsony power over smaller companies trying to enter the market.
- Workers in the gig economy may experience the effects of oligopsony when competing for jobs with limited buyers.
- Oligopsony can lead to lower wages for workers due to limited options for employment.
- Local governments may attempt to regulate oligopsony practices to protect consumers and workers.
- Oligopsony power can stifle innovation and competition within an industry.
- In some cases, oligopsony can lead to higher prices for consumers as suppliers are squeezed by buyers.
- Oligopsony can create barriers to entry for new businesses looking to compete in the market.
- Economists study the effects of oligopsony on various industries to understand market dynamics.