In an absence of competition situation, a supplier may hold the buyer hostage by unduly raising prices without justification or becoming too complacent, particularly when there are higher switching costs.

Question

Quizplus · Accepted Answer

In absence of competition, a supplier may have the power to unduly raise prices without justification or become complacent, knowing that the buyer has limited options due to higher switching costs. This situation is known as a monopoly or a monopsony.

In an Absence of Competition Situation, a Supplier May Hold