What is a bilateral monopoly?
A form of bilateral monopoly occurs when a buyer purchases a property that has a unique ability to create additional value for only that buyer. For example, the owner of a manufacturing plant might approach the owner of a small adjoining vacant lot that abuts a railroad track on its far side. By purchasing the lot, he can now build a rail spur onto his own property and save $100,000 annually on shipping costs. That property is going to be worth more to him than to a random buyer who cannot realize synergies. Another example of a bilateral monopoly is a property owner who purchases a neighboring property after having inadvertantly contaminated it. By purchasing the property, even at an above–market price, he forestalls a lawsuit and takes control of the clean-up himself. The typical definition of market value presumes a sale by a random buyer and seller where there is no undue stimulus — a sale in which both are typically motivated. In the examples above, the owners have a special mot
A form of bilateral monopoly occurs when a buyer purchases a property that has a unique ability to create additional value for only that buyer. For example, the owner of a manufacturing plant might approach the owner of a small adjoining vacant lot that abuts a railroad track on its far side. By purchasing the lot, he can now build a rail spur onto his own property and save $100,000 annually on shipping costs. That property is going to be worth more to him than to a random buyer who cannot realize synergies. Another example of a bilateral monopoly is when a property owner purchases a neighboring property after having contaminated it. By purchasing the property, even at an above-market price, he forestalls a lawsuit and takes control of the clean-up himself. The typical definition of market value presumes a sale by a random buyer and seller where there is no undue stimulus a sale in which both are typically motivated. In the examples above, the buyers have a special motivation for acqui
