Monopsony
![A monopsonist employer maximizes profits by choosing the employment level L, that equates the marginal revenue product (MRP) to the marginal cost MC, at point A. The wage is then determined on the supply curve, at point M, and is equal to w. By contrast, a competitive labor market would reach equilibrium at point C, where supply S equals demand. This would lead to employment L' and wage w'.](/Images/godic/202501/28/Monopsony-static-partial-equilibrium.svg5242.png")
![The grey rectangle is a measure of the amount of economic welfare transferred from the workers to their employer(s) by monopsony power. The yellow triangle shows the overall deadweight loss inflicted on both groups by the monopsonistic restriction of employment. It is thus a measure of the market failure caused by monopsony.](/Images/godic/202501/28/Monopsony-welfare-effects.svg5242.png")
![With a binding minimum wage of w'' the marginal cost to the firm becomes the horizontal black MC' line, and the firm maximises profits at A with a higher employment L''. However, in this example, the minimum wage is higher than the competitive one, leading to involuntary unemployment equal to the segment AB.](/Images/godic/202501/28/Monopsony-minimum-wage.svg5242.png")
In economics, a monopsony (from Ancient Greek μόνος (mónos) "single" + ὀψωνία (opsōnía) "purchase") is a market structure in which only one buyer interacts with many would-be sellers of a particular product. In microeconomic theory of monopsony, a single entity is assumed to have market power over terms of offer to its sellers, as the only purchaser of a good or service, much in the same manner that a monopolist can influence the price for its buyers in a monopoly, in which only one seller faces many buyers.