March 20, 2018 

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BILATERAL MONOPOLY: A market containing a single buyer and a single seller. Bilateral monopoly is the combination of a monopoly market on the selling side and a monopsony market on the buying side. Factor markets tend to offer the best examples of bilateral monopolies, and thus is the field of economic analysis where this term generally surfaces. A market dominated by a profit-maximizing monopoly tends to charge a higher price. A market dominated by a profit-maximizing monopsony tends to pay a lower price. When combined into a bilateral monopoly, the buyer and seller are forced to negotiate a price. Then resulting price could end up anywhere between the higher monopoly's price and the lower monopsony's price. Where the price ends ups depends on the relative negotiating power of each side.

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Obtaining the most consumer satisfaction from available resources. In other words, resources are allocated in such a way that consumer satisfaction is at its highest possible level. This is also termed either efficiency or allocative efficiency.
Economic efficiency means the economy is doing the best job possible of satisfying unlimited wants and needs with limited resources--that is, of addressing the problem of scarcity. To achieve economic efficiency, however, the economy must first achieve technical efficiency. Technical efficiency means that society is getting the most production from available resources. There is no waste in the production process.

Economic efficiency, however, means that this technically efficient production is also useful to or valued by people. While technical efficiency might be achieved in the production of purple spotted stuffed animals, economic efficiency is not achieved if no one actually wants purple spotted stuffed animals and they remain stored in a big purple warehouse.


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ECONOMIC EFFICIENCY, AmosWEB Encyclonomic WEB*pedia,, AmosWEB LLC, 2000-2018. [Accessed: March 20, 2018].

Check Out These Related Terms...

     | efficiency | technical efficiency | consumer sovereignty | satisfaction | production | full employment |

Or For A Little Background...

     | allocation | resource allocation | scarcity | limited resources | unlimited wants and needs | economic goals | factors of production | economic thinking |

And For Further Study...

     | distribution standards | economic system | seven economic rules | production possibilities | three questions of allocation | competitive market | minimum efficient scale | market efficiency | rule of consumer equilibrium |

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