what is a monopsony 
a monopsony is a market condition in which there is only one buyer the monopsonist like a monopoly a monopsony also has imperfect market conditions the difference between a monopoly and a monopsony is primarily in the difference between the controlling entities a single buyer dominates a monopsonized market while an individual seller controls a monopolized market monopsonists are common in areas where they supply most or all of the region s jobs understanding a monopsonyin a monopsony a large buyer controls the market because of their unique position monopsonies have a wealth of power for example being the primary or only supplier of jobs in an area the monopsony has the power to set wages in addition they have bargaining power as they are able to negotiate prices and terms with their suppliers monopsonies take many different forms and may occur in all types of markets for example some economists have accused ernest and julio gallo a conglomerate of wineries and wine producers of being a monopsony the company is so large and has so much buying power over grape growers that grape wholesalers have no choice but to lower prices and agree to the company s terms monopsony comes from two greek words monos meaning single and opsonia meaning purchase characteristics of a monopsonya monopsony is unique to other forms of market situation with distinctive market features some of these characteristics are below in a monopsony there is only one buyer which gives them significant market power and control over the price and quantity of goods or services purchased if more than one buyer is present it is not a monopsony for this reason there s usually natural or built in limitations to the market that make it unfeasible or impossible for there to be other buyers due to there being a single buyer that holds a majority of power monopsonies mean sellers are relatively weak and have reduced bargaining power this usually results in lower prices and lower quantities sold though there may be multiple suppliers or sellers they usually have collective less ability to control the market compared to what the buyer can impose market inefficiencies arise when the single consumer buys less of the good or service than would be produced in a more competitive market this may force producers to cut wages store unsold inventory that would have otherwise been consumed in a normal market or reduce prices to unprofitable levels since the buyer has significant control over the market there is less incentive for suppliers to invest in innovation or quality improvements even if the producers were to innovate or find better ways to produce a good they may not be rewarded by a competitive market through better margins or higher prices therefore monopsonies are most detrimental to the long term growth as it tends to stunt innovative thinking 