(18) Oligonomy is a term defined by Steve Hannaford on http://www.oligopolywatch.com as an increasingly common phenomenon in which an oligopoly (a market sector with few sellers) also acts as an oligopsony
(a market sector with few buyers): "For example, a handful of companies (McCormick, Durkee) buy most of the culinary herbs grown around the world.
Buyers of farm production may have been arbitrary in their pricing and/or in its product acceptance-policies; or sellers of supplies may be gouging customers with exorbitantly high prices (respectively, the oligopsony
and oligopoly problems).
A single buyer is called a monopsony and two or more buyers are referred to as an oligopsony
This is necessary because gas prices can be "set" by the buyers when they control the market via an oligopsony
(a few wholesale buyers 'gas supply marketers') and that the only method to control an oligopsony
in a relatively inelastic market, such as the oil and gas business, is to restrict their ability to set price by removing their ability to influence financial transactions and index reporting of resale commodity prices.
Their market power is typically based on high concentration and oligopsony
power, where many farms deliver to a single processor or trader (Hobbs et al., 1997).
Place des martyrs 7, 1000 Brussels, Belgium firstname.lastname@example.org Table 1 Enterprise's development stage and investors' desired return Development Stage Seed Start-up Early stage Desired return 80-100% 40-70% 30-40% Market structure mono/ oligopoly competition oligopoly Risk level very high Rather high normal Development Stage Expansion Mature Desired return 25-30% 20% Market structure oligopsony
Risk level limited very limited
In addition, increased market concentration changes the balance of power between retailers and suppliers, creating oligopsony
in the upstream market, with negative effects on competition (ACCC, 2004).
Using the term "oligopsony
," he describes the beef commodity chain as among the most "imbalanced" of Canada's agroindustries because "15,000 calf producers sell feeder cattle to 400 feeders, who in turn sell finished slaughter cattle to a dozen or so meat-packing plants."(5) Yet, in his discussion of public allegations of profiteering during World War II, MacLachlan defends meatpackers, emphasizing the industry's low margins.
Economists refer to this as an oligopsony
: a market with few buyers.
tlis is because otler big buyer price-fixing agreements--so-called oligopsony
agreements, (3) in which buyers profit by agreeing to buy an anticompetitively low level of inputs (4)--are often considered per se illegal.
Economists argue that shortages are related to a lack of or lagged increase in real wages (Friss 1994), an imperfectly competitive market such as in monopsony or oligopsony
(Yett 1975), or a problem with geographic distribution and specialty (Yett 1970; Friss 1994).
This exchange situation is formally called monopsony or oligopsony
. Conversely, the commercial interests of suppliers are best served by an exchange situation in which they are the sole supplier or one of a small number of suppliers and there are many interchangeable buyers.