An oligopsony is a market form in which the number of buyers are small while the number of sellers in theory could be large. This typically happens in market for inputs where a small number of firms are competing to obtain factors of production. It resembles an Oligopoly, where there are many buyers but just a few sellers. An oligopsony is a form of Imperfect competition. In economics, the main criteria by which one can distinguish between different market forms are: the number and size of producers and consumers in the market, the type of goods and services being traded, and the degree to which information can flow freely. ... An oligopoly is a market form in which a market is dominated by a small number of sellers (oligopolists). ... In economic theory, imperfect competition, is the competitive situation in any market where the conditions necessary for perfect competition are not satisfied. ...
The terms monopoly (one seller), monopsony (one buyer), and bilateral monopoly have a similar relationship.
An example of an oligopsony in our economy might be fast food chains, of which there are a relatively small number. They buy food from a large number of small farms.
References
Bhaskar, V., A. Manning and T. To (2002) 'Oligopsony and Monopsonistic Competition in Labor Markets,' Journal of Economic Perspectives,16, 155–174.
Bhaskar, V. and T. To (2003) 'Oligopsony and the Distribution of Wages,' European Economic Review,47, 371-399.
Oligopsony is a market form in which the number of buyers are small while the number of sellers in theory could be large.
A market with a few sellers (oligopoly) and a few buyers (oligopsony) is referred to as a bilateral oligopoly.
Unprecedented levels of competition, fueled by increasing globalisation, have resulted in the emergence of oligopsony in many market sectors, such as the aerospace industry.
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