Duopsony refers to a market structure characterized by the presence of only two buyers for a particular product. Consequently, sellers face restricted avenues to sell their goods, while buyers possess greater leverage to negotiate prices. This scenario can be likened to a tug-of-war game between the two buyers, with the seller caught in the middle.
A duopsony is a market situation characterized by the presence of only two buyers for a specific product or service. For instance, in a small town, there may be only two coffee shops that purchase coffee beans from farmers. In such a scenario, the coffee shops hold significant power in determining the price of coffee beans, leaving the farmers with limited alternatives for selling their products. Essentially, in a duopsony market, the two buyers possess considerable bargaining power, enabling them to dictate the price and terms of the transaction. This can result in unfair pricing for the sellers, who are constrained by their lack of alternative buyers. In the given example, the coffee shops can negotiate a lower price for coffee beans, and the farmers are compelled to accept it since there are no other buyers available in the market.
Duopsony is a market structure in which there are only two buyers for a particular product or service.
No, duopsony is not illegal. However, it can lead to anti-competitive behavior and may be regulated by antitrust laws.
Duopsony can lead to lower prices for suppliers as the two buyers have significant bargaining power.
Yes, duopsony can lead to a monopoly if the two buyers collude and prevent other buyers from entering the market.
The Sherman Antitrust Act and the Clayton Antitrust Act are the main laws that regulate duopsony.
Yes, suppliers can take legal action against duopsony buyers if they engage in anti-competitive behavior.
Duopsony can be prevented by promoting competition in the market and preventing collusion between the two buyers.
Duopsony can lead to lower prices and increased bargaining power for buyers.
Duopsony can lead to lower prices and reduced bargaining power for suppliers.
Yes, duopsony can be beneficial for both buyers and suppliers if it leads to fair competition and does not result in anti-competitive behavior.
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This glossary post was last updated: 16th April 2024.
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