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In economics, a monopsony is a market form with only one buyer, called "monopsonist", facing many sellers. It is an instance of imperfect competition, symmetrical to the case of a monopoly, in which there is only one seller facing many buyers. The term "monopsony" was first introduced by Joan Robinson (1933).

Overview

A monopsonist has market power, due to the fact that he/she can affect the market price of the purchased good by varying the quantity bought. Formally, this is so because a monopsonist faces a supply curve with a finite (and generally positive) price elasticity. However, one can find this condition - and hence monopsony power - also in markets with more than one buyer. Yahoo! reviewed these sites and found them related to Office Supplies > Binding
and Lamination. In all such cases the resulting market form is called an oligopsony.

For most practical purposes, what matters is monopsony power as such, whether it is exercised by one or more subjects. In standard microeconomics, where monopsonists or oligopsonists are assumed to be profit-maximizing firms, monopsony power leads to a market failure, due to a restriction of the quantity purchased relative to the (Pareto-) optimal competitive outcome. Moreover, markets with monopsony power are predicted to react differently to public price regulations. Monopsony power is thus relevant from both the normative and positive points of view.