Abbrochment – definition and meaning
An abbrochment occurs when a company or person monopolizes a market by purchasing a product in bulk or wholesale to sell it retail – at a higher price – as the product’s only vendor. It is the act of monopolizing products in the market by buying at wholesale. The business’ aim is to re-sell the products at retail. The term ‘abbroachment’ has the same meaning.
Put simply, it refers to an entity buying up of goods at wholesale to control the supply and be able to resell them at significantly higher retail prices.
Abbrochment creates a monopoly in which a sole vendor sets prices higher than the normal market price. Not only does it create a monopoly, but it also makes it extremely difficult for other players to enter the market.
The verb To Abbroach means to monopolize goods or forestall a market.
MBASkool.com writes that this will “also lead to arbitrage where the products from one market will be transferred to another market and sold. These will lead to inefficiencies in the market.”
In the image above, the vendor bought up all the supplies of a product in the market, making them the sole supplier. This is abbrochment as they bought up all the goods wanted to control their retail sales.
Put simply, abbrochment (to abbroach) occurs when one entity buys up all the goods – which in this case are the fictitious ‘blues’ – before they reach the market, at wholesale prices, and sells them at retail prices. The ‘abbroacher’ aims to gain total control. They want to be the sole vendor, i.e. to have a monopoly.
Abbrochment = forestalling the market
Forestalling the market is the act of contracting for or buying up any provision or merchandise on its way to the market. The intention is to re-sell it at a higher price, dissuade people from bringing their provisions or merchandise to market, or persuading them to raise prices when there.
The term ‘engrossing’ differs from ‘forestalling’ in that the former involves buying up large quantities of merchandise after they have entered the market, with a view of having monopoly control. Forestalling involves doing so before the goods reach the market.