Monopsony is a market structure where there is only one buyer for a particular good or service. This situation gives the buyer significant power over suppliers, allowing them to set prices lower than in a competitive market. Monopsony often occurs in labor markets, where a single employer dominates the hiring of workers in a specific area or industry. In a monopsony, suppliers may struggle to find alternative buyers, leading to reduced income and less incentive to improve their products or services. This can result in inefficiencies and a decrease in overall market welfare, as the buyer's power limits competition and innovation among suppliers.