Question

In this chapter, we have discussed various types of market structure. However, there are other types of markets as well. What do you understand by the following type of market:

Bilateral monopoly

Answer 1

A bilateral monopoly is a market structure in which there is only one seller and one buyer, meaning both sides hold monopoly power. This situation typically arises in the factor market, where a single seller provides factor services to a single buyer. For instance, in the labour market, a bilateral monopoly may occur when a trade union (monopoly supplier) provides labour to a single employer (monopsonist) who is the only buyer of that labour.