Oligarchy + Monopoly ≠ Oligopoly
I’ve long been aware of the words oligarchy and monopoly, but I’ve only just discovered the word oligopoly.
The word oligarchy describes a type of government:
government by the few. from oligoi “few, small, little” plus arkhein “to rule.”
The word monopoly describes a type of market paradigm:
exclusive control of a commodity or trade, from monos– “single, alone + polein “to sell.
The word oligopoly, like monopoly, is a term used in economics:
oligopoly [(ŏl’ĭ-gŏp’ə-lē] – a market situation in which each of a limited number of producers is strong enough to influence the market but not strong enough to disregard the reaction of his competitors
Here it is in some headlines:
Nonlinear pricing in an oligopoly market: the case of specialty coffee–RAND Journal of Economics
‘Market Economy’ or Oligopoly-Finance Capitalism? —Monthly Review, Senegal, Africa
An oligopoly model of commercial fishing–Seoul Journal of Economics
Oracle president backpedals on ‘oligopoly’ report —CNET News
There’s also a word for a market situation in which two competing sellers hold the controlling power of determining the amount and price of a product or service offered to a large number of buyers: duopoly.
Monopoly, duopoly and oligopoly, which refer to the control exercised by sellers, have these corresponding forms to describe the role of buyers:
monopsony – a market situation in which there is a single buyer for a given product or service from a large number of sellers
duopsony a market situation in which two rival buyers hold the controlling power of determining the demand for a product or service from a large number of sellers
oligopsony – a market situation in which each of a limited number of buyers is strong enough to influence the market but not strong enough to ignore the reaction to such influence by his competitors
The suffix –opsony in these words derives from Greek opsonia, “purchase of victuals, catering.”
I don’t know where you’ll find a use for these words, but I think they’re cool.
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4 Responses to “Oligarchy + Monopoly ≠ Oligopoly”
I heard monopsony for the first time on the NPR Planet Money podcast. An economist referred to negotiations with somali pirates as a “monopolist / monopsonist problem”. A situation where there is one buyer and one seller. This is interesting to economists because there is no market to set the price.
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Being a student of economics, allow me to add: oligopoly leads to the formation of cartels and groups that tend to formulate a kind of unified monopoly to corner the market paradigm…
Like the corner with three gas stations…
The word monopoly describes a type of market paradigm
In the sense it’s usually used, it describes a non-market paradigm. Rothbard proved that monopoly (in the sense usually meant; i.e., where the monopolist can increase his selling price without suffering losses. In the literal sense, pretty much every seller is a monopolist: Nike is only seller of Nike-brand shoes, etc.) is impossible in a free market. Monopoly can only be a result of legislation, not markets.