Monopsony in the Factor Market

Just as a monopolist is a sole seller in a market, a monopsonist is a sole buyer. If everyone in a small town works for a single coal mine, then the mine has monopsony power in the local labor market. A price-taking employer of a factor faces a horizontal supply curve, meaning that hire-price will be unaffected. But the monopsonist is the whole demand side of its market, so the factor supply curve it faces is upward slopping.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit, Line of Sight