Bilateral Monopoly

It is a market characterized by the presence of a monopolist confronting a monopolist. Thus, the seller market forces operate simultaneously with the buyer market forces. In the case, the price quantity combination is determined either thought the dominance of one participant or thought collusion and bargaining.

Let us refer to possible solution under bilateral monopoly:

1. If the seller dominates, the monopoly solution holds at F.

2. If the buyer dominates, the monopoly solution holds as E.

3. If neither dominates but gets into collusion and/or bargains, then the competitive solution holds at D or G. when the monopolist and the monopolist and the monopolist realize their mutual interdependence, they may collude and aim at joint profit maximisation at a point where the value of buyer’s marginal product equals the seller’s marginal cost.

An alternative is to assure that the buyer can do no worse than the monopoly solution and that the seller can do no worse than the monopolist solution. In either case, the solution will depend on the relative strength of the bargaining power of the players.

Collective Bargaining is a form of bilateral monopolist negotiations which yield contractual agreement (solution). It has tremendous application in the area of bilateral and International Marketing in particular.

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