What is the Difference Between Monopoly and Monopsony?

Monopoly and monopsony are both market conditions that involve a single entity influencing and distorting a free market. The main difference between the two lies in the aspect of trade being controlled.

• Monopoly: In a monopoly, a single seller controls or dominates the supply of goods and services, effectively eliminating economic competition for the production of a particular good. Monopolies can result in high profits for the dominant entity but often lead to market inefficiencies, such as higher prices for consumers.
• Monopsony: In a monopsony, a single buyer controls or dominates the demand for goods and services. Monopsonies can also lead to market inefficiencies, such as lower wages for workers due to the buyer's ability to lower the price of a product or service.

Both monopolies and monopsonies can result in high profits for the dominant entity, but they often lead to different market inefficiencies. For example, in a monopoly, consumers face higher prices, while in a monopsony, workers may be forced to accept lower wages due to the imposed lower prices.

Comparative Table: Monopoly vs Monopsony

Monopoly and monopsony are both market conditions that involve a single dominant entity, either a seller or a buyer. Here is a comparison between the two:

Both monopoly and monopsony involve a single entity influencing and distorting a free market. The monopoly controls the supply of goods or services, while the monopsony controls the demand for goods or services.