In a bilateral monopoly, one supplier faces one customer. According to whicheverhealth, the bilateral monopoly is a form of market that regulates the relationship between supply and demand in a market. In practice, the bilateral monopoly occurs rather rarely because there are usually either several suppliers or several buyers for a product.
In this lesson you will learn about the two-sided monopoly. We explain to you what the bilateral monopoly is and how it is integrated into the system of classic market forms. Now that you know how to recognize a bilateral monopoly, let’s introduce you to more examples of markets with little demand. To deepen your knowledge, you can answer a few practice questions after the text.
- Synonym: bilateral monopoly
- English: two-sided monopoly
What should you know about the bilateral monopoly?
Every market is determined by the relationship between supply and demand. In a bilateral monopoly, there is only one actor on both the supply side and the demand side.
Two-sided monopoly: the different forms of the market
Depending on which of the two sides predominates, the market forms monopoly, oligopoly and polypol can be distinguished from one another. Depending on whether there are many, few or only one customer, many, fewer or only one supplier, other types of market can be distinguished.
|Many providers||Few providers||One provider|
|Lots of inquirers||Polypol||Oligopoly||monopoly|
|Few inquirers||Demand oligopoly||Bilateral oligopoly||Limited monopoly|
|One inquirer||Monopsony||Limited monopoly of demand||Two-sided monopoly|
Classic market forms at a glance
The three classic market forms are:
If a market is only served by one provider, one speaks of a monopoly in economic terms. Because he is the only entrepreneur who offers this product, he can set the price himself. Due to its unique selling point, the monopolist can determine the selling price for his sales product himself. As a monopoly, the entrepreneur encounters one, many or a few customers.
The oligopoly is the type of market that is most common in practice. Few providers meet many buyers. In contrast to the monopolist, the entrepreneurs in an oligopoly cannot freely determine their selling price. You have to z. B. react when a competitor offers an equivalent product at a lower price.
The Polypol is characterized by the fact that many suppliers meet many customers. Here there is lively competition among the providers because none of the entrepreneurs has a unique selling point that would make them a monopoly. Inquirers encounter a wide range of products.
Sign of the bilateral monopoly
The bilateral monopoly is characterized by the fact that there is only one market participant who offers the product and one who purchases the product. For the other market participants, neither the production nor the consumption of the product is interesting.
A company manufactures railway locomotives. The Deutsche Bundesbahn is the only customer on the market.
More examples of markets with little demand
In addition to the bilateral monopoly, the market also knows the following two types of market in which only one consumer requests the products:
- Limited monopoly of demand
The monopsony is a market form in which one customer meets many suppliers. It is practically the reversal of a monopoly. The sole customer can exercise his unique position in that he can freely decide from which provider he buys the product.
Limited monopoly of demand
With a limited monopoly of demand, few entrepreneurs offer their products on the market. There is only one consumer on the demand side. This is e.g. B. the state. A limited monopoly of demand arises when this z. B. asks police vehicles because the number of providers is small.