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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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Lesson 23: Factor Market Equilibrium | Unit 4: Monopsony Page: 19 of 24

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In this unit, you should have learned about:
  • How buyers can have market control in factor markets like sellers have market control in output markets.
  • Monopsony control of a factor market by a single buyer in terms of limited substitutes and entry barriers and what this means for the factor supply curve and marginal factor cost.
  • How and why monopsony employs fewer resources and pays a lower wage than perfect competition.
  • Why monopsony is inefficient because it employs fewer resources and pays a lower wage than perfect competition.


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AVERAGE REVENUE, MONOPOLISTIC COMPETITION

The revenue received for selling a good per unit of output sold, found by dividing total revenue by the quantity of output. Average revenue often goes by a simpler and more widely used term... price. For a monopolistically competitive firm average revenue is greater than marginal revenue. Average revenue for a monopolistically competitive firm is often depicted by a negatively-sloped average revenue curve.

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Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors seeking to buy either an AC adapter that won't fry your computer or a case for your designer sunglasses. Be on the lookout for slow moving vehicles with darkened windows.
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