The situation of monopsony is most closely affiliated with which of Porter's Five Forces of industry competition?
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A. B. C. D. E.D
A monopsony exists when there is only one buyer for a product or service. This is contrasted by a monopoly, where there are many buyers and only one seller.
Monopsony is most closely characterized by the bargaining power of buyers, as the sole buyer has much power in influencing prices. If there exists only one buyer for an industry or company's product, the bargaining power of suppliers will be small. This will lead to increased competition in the industry.
While monopsony is a rare situation, it nonetheless occurs. For example, certain automobile parts are purchased only by one of the large auto manufacturers.
These automobile manufacturers have tremendous pricing power from their suppliers, to many of which they are the only customer.