Bilateral monopoly
Topic: Market Structures, Market Failure and Competition · NCERT: Beyond NCERT
Meaning
A bilateral monopoly is a market with only one seller and only one buyer. The seller is a monopoly (the only supplier) and the buyer is a monopsony (the only purchaser). Neither side can simply dictate the price, so supply and demand do not fix it. The final price depends on bargaining power: how strong each side is in the negotiation and what each can afford to walk away from. It matters because the outcome can land anywhere between the price the seller wants and the price the buyer wants.
Example
In a factory town, one trade union may be the only supplier of organised labour, and one company may be the only big employer. The wage then comes out of union–management bargaining, not market forces. Strikes, lockouts and outside options decide who gets the better deal.
Don't confuse with
- Duopoly: two sellers competing for many buyers. A bilateral monopoly is one seller facing one buyer.
- Monopsony: one buyer facing many sellers, so the buyer can push the price down. In a bilateral monopoly the seller has power too.