Monopoly and Monopsony

Monopoly and monopsony are market structures that describe control over buying and selling. A monopoly occurs when a single company dominates the market for a product or service, allowing it to set prices and limit competition. In contrast, a monopsony exists when there is only one buyer in a market, giving that buyer significant power over suppliers and prices. Both structures can lead to inefficiencies, affecting consumers and suppliers by limiting choices and potentially leading to higher prices or lower wages. Understanding these concepts helps to analyze market behavior and regulatory policies.