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Simple English definitions for legal terms
bilateral monopoly
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A quick definition of bilateral monopoly:
Bilateral monopoly is when there is only one buyer and one seller in a market. This can cause delays in making deals because both parties can hold out for a better deal without worrying about competition from other buyers or sellers. It's like a game of tug-of-war where both sides are evenly matched. This type of monopoly is hypothetical and not very common in real life.A more thorough explanation:
Bilateral monopoly is a hypothetical market condition where there is only one buyer and one seller. This results in transactional delays because either party can hold out for a better deal without fearing that the other party will turn to a third party.
For example, if there is only one company that produces a certain product and only one company that buys it, then they are in a bilateral monopoly. The buyer can hold out for a lower price, and the seller can hold out for a higher price, causing delays in the transaction.
Another example of bilateral monopoly is in labor markets where there is only one employer and one union representing the workers. The employer can hold out for lower wages, and the union can hold out for higher wages, causing delays in reaching an agreement.
In both examples, the lack of competition leads to delays and inefficiencies in the market.