What market situation exists with few sellers and few buyers?

The correct answer is the situation described is known as bilateral oligopoly, which occurs when there are few sellers in a market and few buyers. In this scenario, the dynamics of negotiation and pricing can be significantly influenced by both parties, as each seller has some degree of market power while the buyers also possess the ability to negotiate prices due to their limited number. This creates a unique market structure where the actions of one party directly impact the other, leading to a complex interplay in pricing, quantities exchanged, and overall market behavior.

Bilateral oligopoly is distinct from other market structures because it combines characteristics of both oligopoly and oligopsony. In standard oligopoly, multiple firms control the supply side, while oligopsony pertains to a market dominated by a few buyers. The key here is the simultaneous presence of both few sellers and few buyers, which can lead to strategic interactions.

In contrast, if there were only a few buyers with many sellers, that would be known as oligopsony. If there were a few sellers participating in a market dominated by many buyers, it would simply be an oligopoly. These alternative structures do not capture the back-and-forth negotiation dynamics inherent in a market with both a few sellers and buyers, which bilateral olig