What are advantages of oligopsony?

Answer 1

Oligopsony, characterized by a market dominated by a few buyers, can lead to increased efficiency in purchasing as these buyers often have significant negotiating power, allowing them to secure lower prices from suppliers. This can benefit consumers through reduced costs, as lower input prices can translate into lower retail prices. Additionally, oligopsony can foster innovation among suppliers, who may seek to differentiate their products to attract the limited number of buyers. However, it's essential to balance these advantages with considerations of potential market power abuse and reduced supplier margins.