Q.What is Bilateral Monopoly ?

Bilateral monopoly exists when one seller (monopolist) deals with one buyer (monopsonist); price and output are indeterminate and depend on the bargaining power of the two sides.

In the Tamil Nadu HSC Class-11 Economics syllabus, bilateral monopoly is explained as follows:

• Meaning: it is a market structure in which a single seller (monopoly) confronts a single buyer (monopsony). Thus market power exists on both the selling and the buying side.
• Indeterminate price: the monopolist wants to charge a high price and the monopsonist wants to pay a low price. Since both have power, ordinary demand-and-supply analysis cannot fix a unique equilibrium — the price and quantity are indeterminate.
• Role of bargaining: the actual price finally settled lies somewhere between the high price the seller wants and the low price the buyer wants, and depends on the relative bargaining strength, skill and patience of the two parties. …