Abbrochment – definition and meaning
What is Abbrochment?
Abbrochment is a legal term which means forestalling of a market or fair. An abbrochment happens when a person monopolizes a market by buying a product wholesale or bulk for the purpose of selling that product retail as the only vendor of the product. Buying up goods at wholesale to control the supply and then resell at much higher resale prices.
For example, if A is currently not on the market, and I purchase all of A to become the only retail provider of A in the marketplace.
The act of forestalling a market by buying up at wholesale the merchandise intended to be sold there, for the purpose of selling it at retail
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.
This is monopoly where there can be unmet demands and price will be above the normal price. 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.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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Abbrochment Law and Legal Definition
Abbrochment is the act of forestalling a market. Abbrochment means purchase of merchandise in wholesale that is intended to be sold in a particular retail market for the purpose of controlling that market. This is for monopolizing goods.
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.
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