Monopsony

See: Monopoly. A monopoly is one SELLER. A monopsony is one BUYER. Think: a coal mine in a small town in West Virginia as a buyer of labor. There simply isn’t another employer anywhere remotely lose. A monopsony? Well, certainly a local one.

What about a public school district buying textbooks for its students? Yeah, pretty much a monopsony. Yes, private schools buy textbooks, but they usually represent a small percentage of the public school volumes, at least in most areas of the country.

And there’s not a whole lot of demand for American textbooks in China…Amazon? Well, as far as books go, Amazon probably is. They’re responsible for some 70% of all books sold in the country, and, well...over half around the world. And that number is going up, not down. So that vaunted Monopsony status is probably coming.

The result? Amazon can buy at any price they want to buy at juuuust up until the seller of that book decides it's not even worth the effort to pack the book in a box and ship it to them or to get them the login codes to download it from their servers.

That is, sellers will sell to a Monopsony until the marginal value add or contribution of that last book is zero. Then they’ll stop. And sit there on a whole pile of books or data that they have to store. While all of this may sound like it brings the wheels of the world to a halt, it doesn’t necessarily mean that. If Monopolies price their products so high that nobody buys...their monopoly is worthless.

And if Monopsonies pay so little for the product they consume that producers stop producing it, then the need they live to serve isn’t filled...and they more or less die. So there is eventually a kind of economic detente in this war of power or leverage. It just... sheds a lot of blood getting there.