Oligopsony

What is 'Oligopsony'

Oligopsony is similar to an oligopoly (few sellers), this is a market in which there are only a few large buyers for a product or service. This allows the buyers to exert a great deal of control over the sellers and can effectively drive down prices.

BREAKING DOWN 'Oligopsony'

A good example of an oligopsony would be the U.S. fast food industry, in which a small number of large buyers (i.e. McDonald's, Burger King, Wendy's) controls the U.S. meat market. Such control allows these fast food mega-chains to dictate the price they pay to farmers for meat and to influence animal welfare conditions and labor standards.

RELATED TERMS
  1. Buyer's Market

    A situation in which supply exceeds demand, giving purchasers ...
  2. Oligopoly

    A market structure in which a small number of firms has the large ...
  3. Purchase-Money Mortgage

    A mortgage issued to the borrower by the seller of the home as ...
  4. Soft Market

    A market that has more potential sellers than buyers. A soft ...
  5. Buyer's Monopoly

    A buyer's monopoly, or "monopsony", is a market situation where ...
  6. Seller's Call

    An agreement between a buyer and a seller for a specific grade ...
Related Articles
  1. Markets

    Understanding Imperfect Competition

    Imperfect competition appears in several different forms. Markets are evaluated by how they compare to, and try to approach, perfect competition.
  2. Personal Finance

    The Ins And Outs Of Seller-Financed Real Estate Deals

    There's more than one way to buy or sell a house. Seller financing presents yet another unique option.
  3. Personal Finance

    Ins And Outs Of Seller-Financed Real Estate Deals

    Seller financing works like this: Instead of a buyer receiving a loan from a bank, the person selling the house lends the buyer the money for the purchase.
  4. Markets

    The Prevalence of Oligopolies

    An oligopoly occurs when a select few companies have the majority of market share.
  5. Personal Finance

    The Pros and Cons of Owner Financing

    Details on the upside and risks of this type of deal for both the owner and the buyer.
  6. Personal Finance

    Rent-To-Own Homes: How The Process Works

    A rent-to-own agreement can benefit homebuyers with bad credit or insufficient funds for a down payment. Here’s how one works.
  7. Professionals

    McDonald’s Vs. Burger King: Comparing Business Models

    Learn how Burger King is turning the tables on McDonald's, and adding another fascinating chapter to a story of one of the most iconic business rivalries of all time.
  8. Investing

    Housing Deals That Fall Through

    Find why buyers back out and what you can do if you're left holding the bag.
  9. Personal Finance

    Playing Hardball When Selling Your Home

    Using these strategies will help you get more cash when selling your house.
  10. Investing

    What is a Financial Market?

    “Financial market” is a broad term used to describe any forum where buyers and sellers meet to trade assets.
RELATED FAQS
  1. What is the difference between perfect and imperfect competition?

    Learn the differences between perfect competition and imperfect competition and what types of markets are considered imperfectly ... Read Answer >>
  2. What are the major differences between a monopoly and an oligopoly?

    The major differences between a monopoly and an oligopoly include the number of firms in the market, type of barriers to ... Read Answer >>
  3. What are the most famous cases of oligopolies?

    Learn about famous examples of oligopolies currently in place in the United States, Canada and worldwide. Explore imperfect ... Read Answer >>
  4. What are some current examples of oligopolies?

    Learn what oligopolies are and examples of markets where they are prevalent. Read Answer >>
  5. What are the differences between Ex Works (EXW) and Free On Board (FOB)?

    Learn about Ex Works and Free on Board, the main difference between these Incoterms, and the responsibilities of buyers and ... Read Answer >>
  6. Does the buyer or the seller control a call option?

    Buy call options and maintain control over the price you pay and when to buy a given stock. Learn how to maintain control ... Read Answer >>
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center