monopsony: meaning, definition, pronunciation and examples
C2academic, technical, formal business
Quick answer
What does “monopsony” mean?
A market situation where there is only one buyer for a product or service.
Audio
Pronunciation
Definition
Meaning and Definition
A market situation where there is only one buyer for a product or service.
A form of imperfect competition that arises when a single buyer controls the purchasing of a good or service, giving them significant power to influence prices, supply terms, and potentially reduce welfare in the market, as opposed to a monopoly which involves a single seller.
Dialectal Variation
British vs American Usage
Differences
No significant differences in meaning, spelling, or usage.
Connotations
In both varieties, the term carries a negative economic connotation of market inefficiency and potential exploitation.
Frequency
Equally rare and technical in both dialects. More common in academic economics than in general business or public discourse.
Grammar
How to Use “monopsony” in a Sentence
have/hold/exercise a monopsony in/over [market]act as a monopsonyThe [entity] constitutes a monopsony.Vocabulary
Collocations
Examples
Examples of “monopsony” in a Sentence
verb
British English
- The NHS, as the primary purchaser, can effectively monopsonise the pharmaceutical market for certain drugs.
- The firm was accused of attempting to monopsonise the local haulage industry.
American English
- The defense department's procurement policies can monopsonize the aerospace components sector.
- A large retailer may monopsonize the market for organic produce in a state.
adverb
British English
- [Not standard; 'monopsonistically' is theoretically possible but extremely rare.]
American English
- [Not standard; 'monopsonistically' is theoretically possible but extremely rare.]
adjective
British English
- The monopsonistic practices of the large retailer were investigated.
- They faced a monopsony situation with only one potential buyer for their crop.
American English
- The monopsonistic power of the league keeps players' salaries low.
- A monopsony market structure distorts the usual supply-demand equilibrium.
Usage
Meaning in Context
Business
Discussed in strategy or procurement contexts where a company is the dominant purchaser of inputs, e.g., 'The mining firm has a monopsony for skilled labour in the region.'
Academic
A core concept in microeconomics and industrial organization for analyzing market power and wage determination.
Everyday
Virtually never used in everyday conversation.
Technical
Used precisely in economic reports, antitrust law, and labor market analyses.
Vocabulary
Synonyms of “monopsony”
Strong
Neutral
Weak
Vocabulary
Antonyms of “monopsony”
Watch out
Common Mistakes When Using “monopsony”
- Misspelling as 'monopoly'.
- Using it to describe a single seller.
- Pronouncing it /ˈmɒnəpsoʊni/ (stressing the first syllable).
FAQ
Frequently Asked Questions
A monopoly involves a single seller facing many buyers, giving the seller price-setting power. A monopsony involves a single buyer facing many sellers, giving the buyer price-setting (or wage-setting) power.
Not inherently illegal, but the abuse of monopsony power (e.g., to force suppliers into loss-making contracts or to suppress wages below competitive levels) can be subject to antitrust or competition law, similar to the abuse of monopoly power.
Yes. A classic example is a large company (e.g., a meat-packing plant or a tech giant) being the primary buyer of a specific service (e.g., freelance coding, certain farm produce) in a region. Another is a national health service acting as the sole purchaser of pharmaceuticals for a country.
In terms of market structure on the other side, the direct opposite is a 'monopoly' (one seller). In terms of competitive state, the opposite is 'perfect competition' or a 'competitive market' with many buyers and sellers.
A market situation where there is only one buyer for a product or service.
Monopsony is usually academic, technical, formal business in register.
Monopsony: in British English it is pronounced /məˈnɒpsəni/, and in American English it is pronounced /məˈnɑːpsəni/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “[Not commonly used in idioms]”
Learning
Memory Aids
Mnemonic
Think: MONOpoly = one SELLER. MONOpSONY = one Buyer (the 'S' and 'B' are swapped – a mnemonic switch).
Conceptual Metaphor
MARKET POWER IS A LEVER; the buyer holds the lever. A MONOPSONY IS A SINGLE GATEKEEPER for sellers.
Practice
Quiz
What is the primary characteristic of a monopsony?