Problem 25

Introduction

A bilateral monopoly exists when a market has only one supplier and one buyer. The one supplier will tend to act as a monopoly. power and look to charge high prices to the one buyer. The lone buyer will look towards paying a price that is as low as possible. Since both parties have conflicting goals, the two sides must negotiate based on the relative bargaining power of each, with a final price settling in between the two sides' points of maximum profit.