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.
