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Simple English definitions for legal terms
monopsony
Read a random definition: Gentleman Usher of the Black Rod
A quick definition of monopsony:
Monopsony: When there is only one buyer in a market, it is called a monopsony. This means that the buyer has a lot of power because there are no other buyers to compete with. This can be bad for the sellers because the buyer can control the price and buy less than what is needed for the market to work efficiently.
A more thorough explanation:
Definition: Monopsony is a market situation where there is only one buyer who controls the market.
Example: A small town has only one grocery store. The grocery store is the only buyer of food products in the town. This means that the grocery store has a monopsony over the food market in the town.
Monopsony is the opposite of monopoly. In a monopoly, there is only one seller who controls the market. In a monopsony, there is only one buyer who controls the market. Monopsony can lead to inefficient allocation of resources because the buyer has the power to limit the quantity of the input product or service below the efficient level.