The trasformation of bilateral monopoly into a market condition of monemporium

Abstract

Pure monopoly (supply side monopoly), where against one seller of particular products which doesn't have close substitutes stand many buyers, as well as the market state of a pure monopsony (demand side monopoly) are theoretical models. In practice such market conditions is hard to find. The aim of this paper is to point out the problem of the equilibrium of an enterprise in the conditions when one company with a monopsonic position on a market of inputs sells its product only to one firm which has a monopoly position in the market of its output, which actually means solving the problem of equilibrium of the enterprise in the conditions of bilateral monopoly. By integrating these enterprises, the market condition of the bilateral monopoly is going to be transformed into a new structure, well-known as the market state of the monemporium. The integrated enterprise has an extremely strong market power manifested through both on the side of selling its output and on the procurement of production inputs. The problem of the equilibrium of such an enterprise and the economic implications, especially those that have a reflection on the level of profit, are a particular area of interests in this paper.