Lecture25 - Lecture 25 Monopsony Bilateral Monopoly...

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Lecture 25 Monopsony Bilateral Monopoly Antitrust issues
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Monopsony Single buyer Examples: Government Labor union “Downstream firm” relative to production input
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Monopsony A monopsonist benefits when it faces an upward sloping supply curve By restricting demand, a monopsonist causes price to decline. The monopsonist’s marginal expenditure from consuming an additional unit exceeds its price, as the additional expenditure at the same time results in an increase in price for all units consumed. Monopsony power results in a deadweight loss and transfer of surplus from sellers to the buyer.
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Monopsony quantity price Marginal value Consumer surplus Supply Q1 P1
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Monopsony quantity price Marginal value Consumer surplus Increasing consumption increases price loss gain Supply Q1 Q2
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Monopsony quantity price Supply Marginal expenditure Marginal value
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Marginal expenditures = marginal value Q quantity price P Deadweight loss Transfer to consumer Supply Marginal expenditure
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