Monopsony

This is opposite of a monopoly. In a monopoly, there is a single seller and lots of buyers, allowing the seller to control the market.

In a monopsony, there is a single buyer, which allows the buyer to control the market.

For example, if you manufacture trigger mechanisms for nuclear warheads, you only have one buyer – the federal government. Even if you were able to sell to other, friendly governments, your own government would exercise considerable power over the terms of that sale. There’s just not a whole lot of buyers for what you’re selling.

Why I Looked It Up

In a book about centrally-planned economies:

The problem for the planners was that a hierarchical system that had been well-suited to the activity of total war – an activity characterized by monopsony, as the state is the sole buyer […]

Counter-intuitively, this presents monopsony as a good thing for manufacturers. The book made the book that when war ends, manufacturers move from having to make a sole buyer happy to having to make the entire market happy. When you just have a single buyer, there’s certainly risk involved, but you can mold your business around that single buyers, which has some advantages.

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