What is a market in which there are many buyers but only one seller?

A set up where two or more parties engage in exchange of goods, services and information is called a market. Ideally a market is a place where two or more parties are involved in buying and selling.

The two parties involved in a transaction are called seller and buyer.

The seller sells goods and services to the buyer in exchange of money. There has to be more than one buyer and seller for the market to be competitive.

Monopoly - Monopoly is a condition where there is a single seller and many buyers at the market place. In such a condition, the seller has a monopoly with no competition from others and has complete control over the products and services.

In a monopoly market, the seller decides the price of the product or service and can change it on his own.

Monopsony - A market form where there are many sellers but a single buyer is called monopsony. In such a set up, since there is a single buyer against many sellers; the buyer can exert his control on the sellers. The buyer in such a form has an upper edge over the sellers.

Types of Markets

1. Physical Markets - Physical market is a set up where buyers can physically meet the sellers and purchase the desired merchandise from them in exchange of money. Shopping malls, department stores, retail stores are examples of physical markets.
2. Non Physical Markets/Virtual markets - In such markets, buyers purchase goods and services through internet. In such a market the buyers and sellers do not meet or interact physically, instead the transaction is done through internet. Examples - Rediff shopping, eBay etc.
3. Auction Market - In an auction market the seller sells his goods to one who is the highest bidder.
4. Market for Intermediate Goods - Such markets sell raw materials (goods) required for the final production of other goods.
5. Black Market - A black market is a setup where illegal goods like drugs and weapons are sold.
6. Knowledge Market - Knowledge market is a set up which deals in the exchange of information and knowledge based products.
7. Financial Market - Market dealing with the exchange of liquid assets (money) is called a financial market.

Financial markets are of following types:

1. Stock Market - A form of market where sellers and buyers exchange shares is called a stock market.
2. Bond Market - A market place where buyers and sellers are engaged in the exchange of debt securities, usually in the form of bonds is called a bond market. A bond is a contract signed by both the parties where one party promises to return money with interest at fixed intervals.
3. Foreign Exchange Market - In such type of market, parties are involved in trading of currency. In a foreign exchange market (also called currency market), one party exchanges one country’s currency with equivalent quantity of another currency.
4. Predictive Markets - Predictive market is a set up where exchange of good or service takes place for future. The buyer benefits when the market goes up and is at a loss when the market crashes.

Market Size

The market size is directly proportional to two factors:

• Number of sellers and Buyers
• Total money involved annually

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Competition law
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An oligopsony (from Greek ὀλίγοι (oligoi) "few" and ὀψωνία (opsōnia) "purchase") is a market form in which the number of buyers is small while the number of sellers in theory could be large. This typically happens in a market for inputs where numerous suppliers are competing to sell their product to a small number of (often large and powerful) buyers. It contrasts with an oligopoly, where there are many buyers but few sellers. An oligopsony is a form of imperfect competition.

The terms monopoly (one seller), monopsony (one buyer), and bilateral monopoly have a similar relationship.

Industry examples

In each of these cases, the buyers have a major advantage over the sellers. They can play off one supplier against another, thus lowering their costs. They can also dictate exact specifications to suppliers, for delivery schedules, quality, and (in the case of agricultural products) crop varieties. They also pass off much of the risks of overproduction, natural losses, and variations in cyclical demand to the suppliers.[citation needed]

Agriculture

One example of an oligopsony in the world economy is cocoa, where three firms (Cargill, Archer Daniels Midland, and Barry Callebaut) buy the vast majority of world cocoa bean production, mostly from small farmers in third-world countries. Likewise, American tobacco growers face an oligopsony of cigarette makers, where three companies (Altria, Brown & Williamson, and Lorillard Tobacco Company) buy almost 90% of all tobacco grown in the US and other countries.[citation needed]

Publishing

In U.S. publishing, five publishers known as the Big Five account for about two thirds of books published.[1] Each of the companies runs a series of specialized imprints, which cater to different market segments and often carry the name of formerly independent publishers. Imprints create the illusion that there are many publishers, but imprints within each publisher co-ordinate to avoid competing with one another when they seek to acquire new books from authors.[citation needed]

Thus, authors have fewer truly-independent outlets for their work. That depresses advances paid to authors and creates pressure for authors to cater to the tastes of the publishers in order to ensure publication, reducing viewpoint diversity.[citation needed]

Retail

Over at least 30 years, supermarkets in developed economies around the world[which?] have acquired an increasing share of grocery markets. In doing so, they have increased their influence over suppliers—what food is grown and how it is processed and packaged—with impacts reaching deep into the lives and livelihoods of farmers and workers worldwide.[2] In addition to increasing their market share with consumers, consolidation of suppliers means that retailers can exercise significant market power. In some countries, this has led to allegations of abuse, unethical and illegal conduct.[3]

The situation in Australia is a good example since two retailers, Coles and Woolworths control 70% of the national food market.[4]

References

1. ^ Kachka, Boris (2013-07-09). "Book Publishing's Big Gamble". The New York Times. Retrieved 9 January 2017.
2. ^ Consumers International. "The relationship between supermarkets and suppliers". Retrieved 11 June 2013.
3. ^ Background Briefing. "Casualties in the supermarket war". Australian Broadcasting Corporation. Retrieved 11 June 2013.
4. ^ Consumers International. "The relationship between supermarkets and suppliers". Retrieved 11 June 2013.

Sources

• 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.

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