Monopsony

A Monopsony is a market form where there is only one buyer, but many sellers. Much like with the monopoly this single buyer has a complete influence on the price. In practice, this market form does not occur often. One example may be a healthcare system where there is only one "buyer" of healthcare services; which is usually the state, or a state-run institution. Another example is defense industry, where the state is the often only buyer. Still another is that of public transport: Either the whole public transport is run by one (usually state-owned) company, or the state awards contracts to run a given line for a certain time period.

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Monopsony Media

The grey rectangle is a measure of the amount of economic welfare transferred from the workers to their employer(s) by monopsony power. The yellow triangle shows the overall deadweight loss inflicted on both groups by the monopsonistic restriction of employment. It is thus a measure of the market failure caused by monopsony.