Bilateral monopoly

Bilateral monopoly

It is a market condition where only one buyer and one seller available for the goods and services (trade). In other word, we can say that it is a market condition where there is no alternative or competition available and both the side know each other and aware about financial condition. Only one buyer and one seller available in the market and also there is no alternative available for goods and services.

Assumptions –

ü  There is only one thing in the market

ü  No alternative available in the market

ü  Only one seller in the market

ü  Only one buyer in the market

ü  Both the party try to maximum there benefit

Fix the price or price determination

Bilateral monopoly

In the picture, D is the demand curve for monopoly and MR is the marginal revenue. MC is marginal cost and it is also equal to monopsony supply curve. If a monopsony wants to buy more thing, he must pay higher price for this. Monopoly try to fix a price like P1 but monopsony want to pay only P2 so they must be settle in middle of both the price like P3.