Business Day

07 August 2026

‘It’s a buyers’ world; salespeople often say.  Our ideas often presume it is not.  Joan Robinson in her magnus opus on ‘imperfect competition’ published in the early 1930s, suggests that ‘monopsony’ is one of the most awkward questions in economics. Competition is not only ‘imperfect’, but it is so due to uneven power dynamics between buyers and sellers. It is in this sense, ‘political’. An outcome of not just brute economic strength (from quality or scale), but also a matter of ‘rules’ (written and unwritten) and conventions designed in favour of one. At the expense of another.

Anyone who has bought livestock for ritual slaughter from a farmer or haggled with a West African market woman will tell you that bargaining is far from ‘symmetrical’. In the case of ‘monopsony’, Robinson described an environment wherein the power of a ‘few’ or one sole buyer; artificially depresses the price below the marginal cost of producing a good.

Yet much of our policy discourses assumes ‘fairness’ in bargaining, when none exists. A recent colloquium hosted by the portfolio committee on trade, industry and competition highlighted this. Industry and interest group after the other agitated for ‘guaranteed offtakes and volume guarantees’, use of public procurement and more tariff protection. Some, even under the cover of ‘free trade’, called for ‘preference’ and priority. Ostensibly to ‘protect’ against the vagaries of market competition for many industries spawned in an entirely different era.

An industrial structure battling to wean itself from the impulses of control boards, cost-plus arrangements in the minerals-energy complex and favourable export quotas into ‘friendly’ Western nations to mop up surpluses. Under such a system, ‘producer (‘seller’) welfare’ was established by state policy. By control boards, anointed by the state and run by farmer groups in agriculture, by ‘cost-plus’ enabled integrated production in mining and heavy industry whose products were sold on at administered prices downstream. These arrangements (including the need for Control Board permission to import certain agricultural products) created an ‘artificially’ captive ecosystem driven by ‘accounting prices’ as economist Oskar Lange suggested, with predictable demand, and by fiat, de-linked from any external price volatility driven world markets for goods. Until things changed.

The last three decades have tilted the scales and revealed deepening ‘buyer-power’ in key product markets, unimaginable in the ‘broederskap’ of old.  What has changed? The flour mills and beverage makers, now have access to imported raw materials (wheat and sugar) without having to get an import permit from a Control Board. Notwithstanding very high tariff ceilings, the option to import without a permit remains that, an ‘option’. As world market prices rise or tank, the option to import becomes prohibitive or attractive, even in the face of tariffs.

The problem manifests differently in state monopolies. Who in some instances, receive ‘administered’ rather than competitive prices for what they produce  There, as seen in rails and other forms of heavy steel used in freight and passenger rail sector or the categories of steel used in electricity generation and transmission; they also yield considerable buyer power. Which is mediated in certain ways by imports.  Imports (often cheaper ones at that, of similar or better quality in some cases) exercise an ability to ‘discipline’ the price formation process domestically. The combination of being the ‘sole buyer’ with relatively convenient access to imports, gives rise to a particular form of buyer power. Industrial policy ought to consider how such buyer power is exercised, mediated, and how its effects (in narrower investment upstream) navigates crises like sanctions, embargos or in the case of agricultural staples, export bans such as those periodically announced in India.

In medicines, as the pharma lobby told lawmakers this week, the state (for our extent of disease burden) is the prized ‘buyer’. How it uses its powers, is as much a matter of industrial concern, as the ‘model’ choice and locational decisions of multinational-driven production networks such as in the automotive sector.

All are matters of power, that while not explicitly named by lawmakers and presenters, stalkingly occupied the room without announcing its presence. Our ideas would do well to discuss how such power is restrained or enabled, in anticipation of crises prevalent in an increasingly hostile trade environment.

Cawe is chief commissioner at the International Trade Administration He writes in his personal capacity.