Monopsony:
Definition of Monopsony:
"When there is a single firm hiring
the labor in the market, it is called monopsony in
economics".
Under perfect competition, the labor
gets wages equal to its marginal revenue product. There is no
exploitation of labor. However, when the market of labor is
imperfect, there emerges the phenomenon of exploitation of
labor. How the wages are determined under imperfect competition
and their exploitation by the monopnist firm is explained in
brief as under.
Characteristics/Features of
Monopsony:
Monopsony in the labor market, is said to exist
when there is a single buyer of labor. The main
characteristics of monopsony are as under:
(i) The firm or employer hires a large portion of the total
employment of a certain type of labor.
(ii) The mobility of labor is very much limited either
geographically or in terms of skills of offer.
(iii) The monopnist faces imperfect competition in the labor
market but perfect competition in the product market.
(iv) The single buyer faces a large number of workers who are
unorganized or non-unionized.
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