Skip to content

ACCA Strategic Professional · Strategic Business Leader · Competitive forces

A regional government pays for all vaccines bought from Tavira Pharma, which holds the patent on the only approved product. The government is the sole buyer in its country. Which statement best describes the balance of power?

Both sides hold significant power. Tavira's patent on the only approved vaccine gives it supplier leverage, while the government as sole buyer controls all demand and can press on price. The outcome depends on negotiation, so neither side holds all the power.

  1. ABoth sides hold power: the monopoly supplier has patent-based leverage, but the sole buyer's monopsony strength enables it to negotiate prices downCorrect
  2. BThe supplier has all the power because of the patent
  3. CThe buyer has no power because it needs the vaccine
  4. DNeither force applies because the market is regulated

Explanation

Bilateral monopoly means a unique product gives the supplier leverage, while a sole buyer controlling all demand gives the buyer leverage. The outcome depends on negotiation and alternatives. It is wrong to assume only one side holds power.

Did you get it right without looking?

One question tells you little. A timed set on Competitive forces shows your real accuracy, how long you take and where you lose marks.

Practise Competitive forcesFree diagnostic mock

More Competitive forces questions