The meaning of the term “monopoly” is known to everyone: there is only one seller on the market, and antitrust laws and special state bodies are fighting the monopolists. It may seem to a person who is not connected with the profession of a marketer or economist that there can only be healthy competition in the market, but this is not so.
Types of markets
There are many other intermediate market conditions besides the well-known monopoly. Depending on the number of buyers and sellers, they are divided into the following subspecies:
- oligopoly and monopoly of several types;
- polypoly;
- monopsony;
- oligopsony.
Let us dwell on oligopsony in more detail and consider specific examples of such market relations.
In economics
Oligopsony in the economy is a state of the market when several buyers can buy goods from a large number of sellers. Its characteristic feature is the great trading power of buyers, which can significantly affect the conditions of supply, including the price of products.
The antonym of oligopsony is oligopoly, where the market situation is completely opposite. Many buyers have a demand for products from several sellers.
Oligopolistic can be considered the mobile market in the Russian Federation. Almost all categories of the population have a demand for telecom operator services, but only four companies in Russia provide them, if we talk about the national coverage of the country. Not including regional companies, Russians can purchase a SIM card from four sellers, such as MTS, Beeline, Megafon and Tele2.
Any such market is very sensitive to pricing and marketing strategies. Representatives of oligopsony are prone to lower prices. Although this process is reasonable.
Oligopsony Examples
We describe this complex term with simple words and examples. When there are two enterprises in the city that are in search of an employee for the position of financial director, the situation is oligopsony.
There are many candidates for a position with a good salary, that is, sellers of their labor force. There are only two buyers who are ready to buy human labor.
Another example of an oligopsonic market is the military manufacturing industry. Many countries mass-produce military equipment. However, at the same time, not many countries of the world require such goods by standards for rearmament of their national army. In this case, many sellers are manufacturing plants, and only some governments of the world act as buyers.
An example of oligopsony can also be considered a combination of agricultural producers and enterprises for the processing of raw materials. In Region X, a significant part of the population is engaged in cow breeding, and therefore residents sell milk to purchasers of two local factories. Thus, there are dozens or even hundreds of sellers of goods, and only a few buyers. That is, it is oligopsony.
In professional sports, this concept occurs at every step. For example, the relationship between professional football players and several clubs. That is, in this case, oligopsony is a large number of successful players with a limited number of places where they can prove themselves.
The situation in Russia
An example of oligopsony in Russia is the launch vehicle manufacturers for the space industry. Such products are produced by only three enterprises in the Russian Federation, however, component parts, mechanisms, parts of the housing and engine are produced by many suppliers.
The same can be said of the global space industry as a whole. The need for manned vehicles, cargo ships and other spacecraft exists in a limited number of countries. The aggregate of buyers here are the United States, China, Russia, as well as those states that plan to launch spacecraft. At the same time, a large number of companies around the world are engaged in the production of equipment.
Also an example of oligopsony is the market for chain grocery stores. There are about 10 retailers in Russia (Pyaterochka, Dixy, Perekrestok, Okay, Viktoriya, Auchan, Metro) and a huge number of distributors of products.
In this case, oligopsony is a few retailers with their online grocery stores that act as buyers, and sellers are many suppliers.
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