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What does this means that the …

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What does this means that the market do not work in fair manner when producers are few and powerful and consumers buy in small amounts and are scattered?
  • 1 answers

Yogita Ingle 6 years, 8 months ago

When the number of seller are few and consumer are large and scattered then producer have more bargaining power while consumer have less. In other words, it can also be said that the producers can determine the price while consumer will have to take the given price. This could lead to exploitation of consumer as producer would have the power to charge high prices for the commodity which has less production. Also, sometimes producers produce lesser quantity of products than what is socially optimal which again brings inefficiency in the market. Here the consumer surplus is also low while producer surplus is high. Thus, it can be said that the functioning in such markets is not fair.

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