Bilateral monopoly
If there is only one market participant on both sides on the supply and demand side of the market for a product, one speaks of a bilateral monopoly (or bilateral monopoly). So monopoly and monopsony meet. This is to be distinguished from a situation with two providers, the so-called duopoly . If there is more than one supplier or buyer on a market, but only very few, one speaks of an oligopoly or oligopsony .
Price formation in the bilateral monopoly
In a bilateral monopoly, pricing is usually very difficult because the buyer's benefit (= maximum price he would be willing to pay) is often greater than the supplier's loss of benefit (= minimum price at which he would be willing to sell). At any price between these two prices, the deal is mutually beneficial. Since both sides are dependent on each other, they have to come to an agreement; At the same time, however, everyone wants to book as large a share of the price difference as possible.
In economic theory, the price can only be determined approximately (in contrast to the simple monopoly or monopsony).
Examples of bilateral monopolies
- An automobile manufacturer wants to run a test track across the remote property of a farmer, among other things. The automobile manufacturer can only buy the property from this farmer; the farmer has practically no other interested parties for his property.
- An employee with unique, highly specialized skills must leave his current employer; there is only one other employer who needs his knowledge.
Actual occurrence
In its textbook-like pure form, a bilateral monopoly is relatively rare, but it is more common in its practical effect on pricing; The causes here are, for example, incomplete information or a clear gap between the minimum prices or the willingness to pay of a provider or buyer compared to alternative providers or buyers.
See also
Individual evidence
- ↑ Duden: Das Lexikon der Wirtschaft , Mannheim 2001, page 77