Are you an EPFL student looking for a semester project?
Work with us on data science and visualisation projects, and deploy your project as an app on top of GraphSearch.
Concept
Bilateral monopoly
Summary
A bilateral monopoly is a market structure consisting of both a monopoly (a single seller) and a monopsony (a single buyer).
Bilateral monopoly is a market structure that involves a single supplier and a single buyer, combining monopoly power on the selling side (i.e., single seller) and monopsony power on the buying side (i.e., single buyer). This market structure emerges in situations where there are limitations on the number of participants, or where exploring alternative suppliers is more expensive than dealing with a single supplier. In a bilateral market, both buyers and sellers aim to maximize their profits. Although the seller may attempt to increase the product prices as the only supplier, the buyer can still negotiate for the lowest possible price since the seller has no other buyers to sell to.
In a standard monopoly structure, the monopolist sells to multiple buyers with no market power, thereby giving the monopolist the power to set their own price and quantity to optimise their profits. The same power imbalance occurs in a monopsony where the monopsonist is the only buyer in a market of many sellers.
Bargaining between buyers and sellers is in all essentials similar to bargaining between two people. So most of the conclusions of the bilateral monopoly theory hold whether or not the bargaining parties are monopolists in the strict sense of the word. As a result, the theory of bilateral monopoly and the theory of bargaining are identical. Furthermore, whether or not the negotiation parties are monopolists in the strict sense of the term, most of the implications of the bilateral monopoly theory hold true. Thus, the theory of bilateral monopoly might also be referred to as the theory of bilateral oligopoly, or theory of bilaterally constrained competition, or the theory of bargaining. However, we will use the term bilateral monopoly because it is the conventional and widely understood phrase.
The increase in bargaining power of one firm in a bilateral monopoly results in an increase in the social attention of the other firm, as well as a decrease in its own social attention.
Official source
About this result
This page is automatically generated and may contain information that is not correct, complete, up-to-date, or relevant to your search query. The same applies to every other page on this website. Please make sure to verify the information with EPFL's official sources.