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[MUSIC PLAYING]

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A monopsony is a
market condition

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in which there's only one
buyer, the monopsonist.

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In a monopsony, a
single buyer generally

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has a controlling advantage that
drives its consumption price

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down.

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Unlike a monopoly,
where a single seller

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controls a market,
in a monopsony,

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a single buyer
dominates the market.

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Monopsonists are common to
areas where they supply most

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or all of the region's jobs.

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They're also common
in labor markets

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where a single employer has an
advantage over the workforce.

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Monopsonists commonly
benefit from low prices

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from wholesalers.

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That's because, like a
monopoly, a monopsony does not

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adhere to standard pricing
from balancing supply side

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and demand side factors.

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And because many sellers
vie for its business,

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the buyer uses its size
advantage to obtain low prices.

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In order to drive down the cost
to the employer and increase

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profit margins, employees
often agree to lower wages.

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Economists and policymakers have
increasingly become concerned

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with the domination of
just a handful of companies

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controlling an outsized market
share in a given industry.

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The long-term fear is
these monopsony industry

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giants will influence
pricing power

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and exert their ability to
suppress industry-wide wages.

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