What does monopsony mean?
Monopsony is a market condition in which there is only one buyer of a particular good or service. Because the buyer has few or no alternative suppliers, it can exert considerable influence over prices, wages, and other terms. The word is most often applied to labor markets, where a large employer may become the main available job in a region and thereby reduce workers' bargaining power. It is also used more broadly for markets involving a single purchaser of agricultural products, raw materials, or specialized services. The concept is the opposite of a monopoly: in a monopoly there is one seller, while in a monopsony there is one buyer. Although the word is mainly used in economics and related technical writing, it is useful for understanding how an unequal number of participants on one side of a market can shape commercial conditions and the bargaining position of the other side.
nounA market situation in which there is only one buyer of a particular good or service, giving that buyer substantial influence over price and terms. It is especially used to describe an employer with considerable power over wages and working conditions.
- A market in which a good or service has only one purchaser, especially a labor market in which one employer has significant control over wages and conditions.
- The condition of being the sole buyer of a commodity or service.
"The company exercised monopsony power by setting wages below what a competitive labor market would have supported."
"Rural hospitals may face a monopsony when the nearest major employer is the only significant buyer of their labor."
"The report warned that the platform's dominance could create a monopsony in the market for freelance drivers."
The plural is monopsonies.
"Different monopsonies can produce very different effects on wages and working conditions."
Monopsony is the mirror image of monopoly: one powerful buyer faces many sellers.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Where does monopsony come from?
Monopsony was formed in the early 19th century from the Greek elements mono-, meaning "one," and opsōnia, meaning "a buying" or "purchase." Its structure deliberately parallels monopoly, which combines mono- with the Greek root for selling or dealing. The word belongs to a family of economic terms describing market structures, including oligopsony, where a small number of buyers dominate a market. Its meaning reflects the contrast between a single seller in a monopoly and a single buyer in a monopsony.
Related word forms
How monopsony is actually used
The term is chiefly formal and technical, especially in economics, labor markets, and industrial organization. It is more specific than the general expression "market power," because it identifies a single buyer rather than merely a dominant purchasing position.
Easily confused with monopsony
A monopoly is a market with one seller, whereas a monopsony is a market with one buyer.
An oligopsony has a small number of buyers, while a monopsony has only one.