Bilateral monopoly

Bilateral monopoly,

Definition of Bilateral monopoly:

  1. Market situation consisting of only one buyer and only one seller. It occurs usually in the intermediate stages of a production process and (since neither party can dominate the other) conditions of monopoly or monopsony do not apply.

  2. A bilateral monopoly exists when a market has only one supplier and one buyer. The one supplier will tend to act as a monopoly power and look to charge high prices to the one buyer. The lone buyer will look towards paying a price that is as low as possible. Since both parties have conflicting goals, the two sides must negotiate based on the relative bargaining power of each, with a final price settling in between the two sides' points of maximum profit.

  3. This climate can exist whenever there is a small contained market, which limits the number of players, or when there are multiple players but the costs to switch buyers or sellers is prohibitively expensive.

Meaning of Bilateral monopoly & Bilateral monopoly Definition