Some of the Advantages and Disadvantages of Monopsony are as follows. So let us check it out some information on pros and cons of monopsony to know more about it.
Advantages of Monopsony are :
- Monopsony has buying or bargaining power in the market.
- In monopsony the reduced cost of purchasing inputs increases their profit margins.
- Monopsony dictate exact specification to suppliers.
- Don't have risks.
- Lower cost for almost all goods and services.
- Monopsony exists both in labour as wells as product markets.
- The extra profit margin can be used to find capital investment or research and development
- Improved value for money
Disadvantages of Monopsony are :
- In monopsony unequal distribution of goods and income is observed.
- Abnormal profits.
- Monopsony is a form of imperfect competition.
- Businesses may use their buying power to squeeze lower prices out of suppliers