The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Bilateral Monopoly

  • James W. Friedman
Reference work entry


A bilateral monopoly is a market that is characterized by one firm or individual, a monopolist, on the supply side and one firm or individual, a monopsonist, on the demand side. The input markets of the monopolist and the output market of the monopsonist can be of any form. The essential ingredient is the single seller–single buyer situation. Because a buyer and a seller of a product, perforce, do business with each other, they are clearly able to make legally binding agreements. This contrasts with firms in the same industry, which do not sell to one another, and which are often precluded by anti-collusion laws from making legally enforceable contracts. Of course, it is also possible to view bilateral monopoly noncooperatively.

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • James W. Friedman
    • 1
  1. 1.