Oligopsony

Oligopsony is a market structure in which a small number of buyers exert significant control over the quantity and price of goods or services. This can lead to reduced competition and potentially lower prices for producers.

One example of oligopsony is the agricultural industry, where a few large companies dominate the market for purchasing crops from farmers. These companies have significant bargaining power and can dictate the terms of trade to farmers, leading to lower prices for their produce.

Another example is the labor market, where a small number of employers control a large share of job opportunities. This can lead to lower wages for workers, as they have limited options for employment.

In an oligopsony market, sellers may have little choice but to accept the terms set by the buyers, as they do not have many alternative buyers to choose from.

Overall, oligopsony can have negative effects on competition, pricing, and overall market efficiency.

Examples of Oligopsony:

The diamond industry, where a few companies control the majority of diamond purchases from miners.
The technology industry, where a small number of companies dominate the market for purchasing components from suppliers.

For more information on Oligopsony, you can visit Wikipedia.