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With your partner
Its 1960, and NASA is going
to be buy a rocket and
soliciting proposals with
private companies to build a
the new rocket. NASA will be
the ONLY buyer of rockets.
Put together a 5 part
proposal, including price, for
the project for NASA to buy.
Pricing power
• 1st case, very fast, who has pricing power
– 2 sources of that power (I think there are really 3)
• 2nd case, longer, who has the pricing power?
How is this different than the other 4
market structures we learned?
• Buyers/sellers
• Barriers to entry
• information
• Oligopoly
• Perfect Competition
• Monopolistic competition
• Monopoly
Monopsony Market structure
• Somewhat rare
• Many sellers, only 1 buyer
• Few barriers to enter supply
market
• Very expensive or special
products being purchased
• Monopsony power comes from
size of the firm, bigger the more
buying power, lower prices for
buyer
• “Market share”
Monopsony Market Examples
• Larger employer, small town
– Mining towns like Morenci,
Winkelman and Bisbee
• Baseball players before 1974
• https://www.youtube.com/wa
tch?v=frYAvrnFxko
Monopsony Market Examples
• Amazon on book market (70%)
• Walmart on clothing & goods
• Healthcare in United Kingdom
– Market in USA?
• Firms with considerable
economies of scale
• How could sellers work to
increase price of their factor?

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Monopsony market structure

  • 1. With your partner Its 1960, and NASA is going to be buy a rocket and soliciting proposals with private companies to build a the new rocket. NASA will be the ONLY buyer of rockets. Put together a 5 part proposal, including price, for the project for NASA to buy.
  • 2. Pricing power • 1st case, very fast, who has pricing power – 2 sources of that power (I think there are really 3) • 2nd case, longer, who has the pricing power?
  • 3. How is this different than the other 4 market structures we learned? • Buyers/sellers • Barriers to entry • information • Oligopoly • Perfect Competition • Monopolistic competition • Monopoly
  • 4. Monopsony Market structure • Somewhat rare • Many sellers, only 1 buyer • Few barriers to enter supply market • Very expensive or special products being purchased • Monopsony power comes from size of the firm, bigger the more buying power, lower prices for buyer • “Market share”
  • 5. Monopsony Market Examples • Larger employer, small town – Mining towns like Morenci, Winkelman and Bisbee • Baseball players before 1974 • https://www.youtube.com/wa tch?v=frYAvrnFxko
  • 6. Monopsony Market Examples • Amazon on book market (70%) • Walmart on clothing & goods • Healthcare in United Kingdom – Market in USA? • Firms with considerable economies of scale • How could sellers work to increase price of their factor?