Monopsony

Part of speech: noun

Pronunciation: /məˈnɒpsəni/

Definitions

1. A market structure in which a single buyer purchases goods or services from many sellers, thereby exercising significant control over prices
2. A market condition where one buyer dominates and controls price levels by purchasing from multiple sources without alternatives for sellers
3. A scenario in economic exchanges characterized by a sole buyer influencing the market by sourcing from various sellers, thus impacting supply dynamics

Etymology: The word was coined in the 1930s by a classicist, not an economist. Bertrand Hallward, a British scholar of Greek, built it from two Ancient Greek roots: "mónos," meaning "alone" or "solitary," and "opsōnéō," which meant "to buy fish or victuals in general." The second root comes from "ópson," a word for delicacies, usually fish and other prepared foods, combined with "ōnéomai," "to buy." Hallward modelled the ending on "monopoly," so a monopsony is, literally, a lone buyer of provisions. The term was popularized by the economist Joan Robinson in her 1933 book "The Economics of Imperfect Competition." She needed a name for the mirror image of a monopoly: where a monopolist controls the price a seller can charge, a monopsonist controls the price a buyer must accept. The gap between those two ideas is what makes the coinage useful, since it lets economists describe a market with one dominant purchaser, such as a large employer in a small town, using a term that sits beside its better-known counterpart.