In a monopsony labor market, how does the presence of a single buyer affect market efficiency compared to a competitive labor market?

In a monopsony labor market, there is only one employer who hires workers, which gives that employer significant power over wages and employment conditions. This situation often leads to lower wages for workers compared to a competitive labor market, where multiple employers compete for workers, driving wages up. Because the single buyer can set wages lower than what workers would earn in a competitive environment, fewer workers may choose to work, resulting in inefficiencies in the labor market. For example, if a town has only one factory that hires labor, the factory might pay workers less than they would earn if several factories were competing for their skills, leading to fewer people willing to work there. This imbalance can cause overall economic productivity to decrease, as not all available workers are employed in the best possible jobs.