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Oligopsony

Definition

An oligopsony is a market form in which the number of buyers is small while the number of sellers in theory could be large. This typically happens in a market for inputs where numerous suppliers are competing to sell their product to a small number of buyers. It contrasts with an oligopoly, where there are many buyers but few sellers. An oligopsony is a form of imperfect competition.

What is 'Oligopsony'

Oligopsony is similar to an oligopoly (few sellers), this is a market in which there are only a few large buyers for a product or service. This allows the buyers to exert a great deal of control over the sellers and can effectively drive down prices.

Explaining 'Oligopsony'

A good example of an oligopsony would be the U.S. fast food industry, in which a small number of large buyers (i.e. McDonald's, Burger King, Wendy's) controls the U.S. meat market. Such control allows these fast food mega-chains to dictate the price they pay to farmers for meat and to influence animal welfare conditions and labor standards.


Further Reading


Oligopsony-Oligopoly The perfect imperfect competition
www.sciencedirect.com [PDF]
Oligopoly and oligopsony have been studied extensively. However, the dual figure of the oligopsonistic-oligopolistic intermediary has not been. This dual personality has a double negative impact on the market, on the one hand reduces the demand to producers who face …

Oligopsony and monopsonistic competition in labor marketsOligopsony and monopsonistic competition in labor markets
www.aeaweb.org [PDF]
Oligopoly and oligopsony have been studied extensively. However, the dual figure of the oligopsonistic-oligopolistic intermediary has not been. This dual personality has a double negative impact on the market, on the one hand reduces the demand to producers who face …

Oligopsony power, asset specificity, and hold-up: Evidence from the broiler industryOligopsony power, asset specificity, and hold-up: Evidence from the broiler industry
academic.oup.com [PDF]
Oligopoly and oligopsony have been studied extensively. However, the dual figure of the oligopsonistic-oligopolistic intermediary has not been. This dual personality has a double negative impact on the market, on the one hand reduces the demand to producers who face …

Analysis on the vertical squeeze on local suppliers by the oligopsony power of MNCAnalysis on the vertical squeeze on local suppliers by the oligopsony power of MNC
en.cnki.com.cn [PDF]
Oligopoly and oligopsony have been studied extensively. However, the dual figure of the oligopsonistic-oligopolistic intermediary has not been. This dual personality has a double negative impact on the market, on the one hand reduces the demand to producers who face …

'Fair trade'coffee and the mitigation of local oligopsony power'Fair trade'coffee and the mitigation of local oligopsony power
academic.oup.com [PDF]
Oligopoly and oligopsony have been studied extensively. However, the dual figure of the oligopsonistic-oligopolistic intermediary has not been. This dual personality has a double negative impact on the market, on the one hand reduces the demand to producers who face …

Oligopsony, institutions and the efficiency of general trainingOligopsony, institutions and the efficiency of general training
papers.ssrn.com [PDF]
Oligopoly and oligopsony have been studied extensively. However, the dual figure of the oligopsonistic-oligopolistic intermediary has not been. This dual personality has a double negative impact on the market, on the one hand reduces the demand to producers who face …

Bank pricing under oligopsony-oligopoly: Evidence from 103 developing countriesBank pricing under oligopsony-oligopoly: Evidence from 103 developing countries
papers.ssrn.com [PDF]
Oligopoly and oligopsony have been studied extensively. However, the dual figure of the oligopsonistic-oligopolistic intermediary has not been. This dual personality has a double negative impact on the market, on the one hand reduces the demand to producers who face …

Process innovation activity in a mixed oligopsony: the role of marketing cooperativesProcess innovation activity in a mixed oligopsony: the role of marketing cooperatives
ageconsearch.umn.edu [PDF]
Oligopoly and oligopsony have been studied extensively. However, the dual figure of the oligopsonistic-oligopolistic intermediary has not been. This dual personality has a double negative impact on the market, on the one hand reduces the demand to producers who face …

Testing for oligopsony power in the Finnish wood market.Testing for oligopsony power in the Finnish wood market.
www.cabdirect.org [PDF]
Oligopoly and oligopsony have been studied extensively. However, the dual figure of the oligopsonistic-oligopolistic intermediary has not been. This dual personality has a double negative impact on the market, on the one hand reduces the demand to producers who face …



Q&A About Oligopsony


What does oligopsony mean?

Oligopsony means a market in which there are only a few large buyers for a product or service.

Which of these fast food chains would be considered a mega-chain?

McDonald's, Burger King, Wendy's

Where does most of the meat used by these fast food chains come from?

Most of it comes from farms in the U.S.

How is oligopsony similar to an oligopoly?

Both oligopsony and an oligopoly have few sellers.

Who has control over the sellers in an oligopsony?

The large buyers have control over the sellers.

What can the large buyers do with this power?

They can drive down prices.

Why might farmers sell their products at lower prices than they otherwise would if there were no fast food chains involved?

Because they know that if they don't sell to one of these companies then none of them will buy their products at all so they must accept whatever price is offered to them by these companies or go out of business completely .

What is another word for "fast food"?

Fast food refers to quick-service restaurants that offer limited menus, standardized production methods, and efficient service.