single buyer - takes advantage of sellers
- oligopsony - market w/ only a few buyers
- monopsony power - lets buyer pay less than market price for a good
- marginal value - additional benefit from purchasing another good
- marginal expenditure - additional cost from purchasing another good
- E = expenditure = P(q)q
- but P(q) in this case set by supply curve, not demand curve
- AE = avg expenditure = P(q)
- quantity bought found at intersection of demand curve and marginal expenditure
- price found by dropping down to corresponding price on supply curve
- demand
- supply, avg expenditure, P(q)
- marginal expenditure
- p* = market price
degree of monopsony power - depends on # of buyers, interaction between buyers
- fewer buyers >> supply becomes less elastic >> more monopsony power
- buyers compete less >> more monopsony power
- more elastic supply >> markdown (p-p*) will be less
surplus - works out just opposite of monopoly
- deadweight loss from smaller quantity desired by buyer(s)
- producer surplus lost >> increase in consumer surplus
Subject:
Subject X2:
