Saturday, January 19, 2008
We live under an unleashed transnational limited-liability profiteers' boardroom hegemony,
trying to get uncle to re-leash the bastards is nothin but a rubes' game. Fool me once....
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 (McCormick, 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.
Another example occurs in the television sector. The handful of companies that own TV channels (Viacom, Disney, GE, etc.) are an oligopoly to those companies who want to buy ad time. They are an oligopsony to those studios that produce and sell programs.
But, as we've said, oligopolies breed oligopsonies, as companies must consolidate to try to defend their interests. Only an oligopsony can stand toe-to-toe with an oligopoly. When several layers of the market have this opposition set up, we have a tiered oligonomy. Some examples: ...