Legal Evidence of an Oil Supply Monopsony: The U.S. and Saudi Arabia before 1974
Article from: OGEL 4 (2020), in Economic and Commercial Context for Oil, Gas and Energy Law
Executive Summary
A monopsony is a single buyer for multiple suppliers where the buyer forces the suppliers to pay lower than normal prices. An example of a monopsony is a single employer in a town that hires all the workers in town and where the workers have no competitive choice about where else to work and so are forced to accept lower than normal wages offered by the monopsonist, and where the monopsonist gains higher than normal employer surplus from the workers. The same situation can happen with oil, such as when John D. Rockefeller in the early 1900s owned or controlled most refining ...