Difference Between Monopoly and Monopsony
Market is not always the same everywhere. Sometimes, it skewed towards sellers and sometimes towards buyers. In market, Monopoly means a condition where there is only one seller industry. In such situation, consumers have no other choice than to buy the products or service of that company. It is monopoly.
Monopoly is ideal situation for a company. He can set price as it wishes. Monopsony is exact opposite to monopoly. In monopsony there are many sellers and competition among them. Consumers have many choices. This type of market is skewed towards consumers. In Moopsony, there is only a single buyer. It should be kept in mind that this type of condition is not an ideal condition. Thus, both the extremities are not good for market as well as consumers.
Both the conditions do not usually exist in an economy. People do not desire both of them because these types of conditions give unbridled hegemony to buyers or sellers. It can be understood by an example. If electricity distribution in a country is under the government control, people will have no choice but to use the electricity on whatever price the government fixes, however, services may not be satisfactory. It is the example of monopoly.
If a poor country having a large number of illiterate people, there will be unemployment. If all of them work as labor, there will be a single buyer in of their services. This is Monopsony. Laborers have to work at the rate fixed by the buyers of their services. Another example of the Monopsony is the industry of defense where the products are purchased by the governments only. There are many companies making the defense equipments, but the buyer is only the government. Thus we understand the difference between monopoly and monopsony. One are opposite to each other and are not good for an ideal market.