Definition
oligopsony
noun
- a market condition in which a small number of buyers control the demand for a product or service, giving them significant power over suppliers and prices
Usage: economics; formal
Examples
- The agricultural industry often operates as an oligopsony, with a few large retailers controlling prices paid to farmers.
- In an oligopsony, suppliers have limited bargaining power because there are few alternative buyers.
- The defense sector exhibits oligopsony characteristics, as the government is the primary buyer of military equipment.
- Oligopsony conditions can lead to lower prices for consumers but reduced profits for producers.
- Labor markets in certain regions may function as oligopsonies when only a few major employers dominate hiring.