Monday, October 06, 2003

The vocabulary of economists has no word to describe an increasingly common phenomenon. An oligopoly, as you know, is a market sector in which there are few sellers. An oligopsony is a market sector in which there are few buyers. But there are an increasing number of market sectors in which the same companies are both oligopolies and oligopsonies. This situation I propose to call an oligonomy.

In an oligonomy, companies act as an oligopoly to one group, as an oligopsony to another. For example, a handful of companies (McCormack, Durkee) buy most of the culinary herbs grown around the world. To the farmers, they constitute an oligopsony, and the farmers are at a disadvantage to them. To the markets that resell their wares, they are an oligopoly, with an advantage over those retailers. That is a simple oligonomy, basically where a few firms act like the gatekeepers between producers and retailers.

Oligopoly Watch

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