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Topic: Monopsony

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Walmart has built a business model based on demanding price sensitive supplier contracts.
Should one company so dominate an industry as to prevent competition among suppliers, the company would have a monopsony instead of a monopoly, the improper control of prices to the consumer.
The antitrust challenge would require proof the company prevented competition for best price and/or obstructed free entry by new suppliers.
www.agcenter.com /Monopsony.htm   (1499 words)

  EH.Net Encyclopedia: Monopsony in American Labor Markets
Assuming the "firm size-wage effect" is due to monopsony power, firms are pushing wages down by one to three percent below the value of the contribution of the last worker to output.
Monopsony does not appear to have been important in company mining towns, a standard textbook example, or in markets for teachers and nurses, early suspects.
In fact, the largest plausible estimates of monopsony exploitation to date are not for blue-collar workers but rather for professional athletes and possibly college professors.
eh.net /encyclopedia/article/boal.monopsony   (3315 words)

 Manning, A.: Monopsony in Motion: Imperfect Competition in Labor Markets.
Monopsony in Motion stands apart by analyzing labor markets from the real-world perspective that employers have significant market (or monopsony) power over their workers.
Our understanding of the distribution of wages, unemployment, and human capital can all be improved by recognizing that employers have some monopsony power over their workers.
Monopsony in Motion will represent for some a new fundamental text in the advanced study of labor economics, and for others, an invaluable alternative perspective that henceforth must be taken into account in any serious consideration of the subject.
press.princeton.edu /titles/7522.html   (550 words)

 Sample Chapter for Manning, A.: Monopsony in Motion: Imperfect Competition in Labor Markets.
Not monopsony in the sense of there being a single buyer of labor, but monopsony in the sense of the supply of labor to an individual firm not being infinitely elastic.
In monopsony models, it is assumed that employers set wages unilaterally whereas the matching models typically assume some process of wage bargaining between employer and worker (although one could set up these models so that employers have all the bargaining power).
Monopsony has a strong prediction, that job search activity should be declining in the wage as there are then fewer opportunities to find a better job.
www.pupress.princeton.edu /chapters/s7522.html   (8471 words)

 Monopsony and labor
Advocates of the monopsony model stress that if a union or a minimum wage, i.e., a “going rate”, was imposed at point B employment would rise to L2 and everyone would be better off.
What all of this amounts to is that the firm will, despite monopsony theory, be facing a demand curve for labour and therefore a determinate price will emerge and labour will be paid the value of its marginal product.
In an effort to rescue the monopsony model economists introduced the idea of oligopsony, a situation in which a handful of firms collude to drive down wage rates.
www.brookesnews.com /061610monopsony.html   (1444 words)

 Monopsony is the Word-of-the-Day by Chris Abraham - Because the Medium is the Message
In standard microeconomics, where monopsonists or oligopsonists are assumed to be profit-maximizing firms, monopsony power leads to a market failure, due to a restriction of the quantity purchased relative to the (Pareto-) optimal competitive outcome.
Monopsony power is thus relevant from both the normative and positive points of view.
A wide and useful survey of both the theoretical and empirical literature on monopsony in labour markets may be found in Boal and Ransom (1997).
www.chrisabraham.com /2006/06/monopsony_is_th.php   (646 words)

 Partial Industry Regulation: A Monopsony Standard for Consumer Protection, 80 California Law Review 13, (1992) (with ...
A monopsony standard provides not only a powerful tool for analyzing how government might intervene to protect consumers, but also a limiting principle for analyzing when intervention is appropriate.
We argue that a monopsony standard provides particularly strong evidence supporting the use of partial-industry regulation because monopsonists often undertake their own private analogues to partial-industry interventions.
A monopsony standard for consumer protection is also attractive because it provides a limiting principle indicating when government should intervene.
islandia.law.yale.edu /ayers/partindu.htm   (1486 words)

 GrimReader: Coercive Monopsony
Monopsony is the situation when there is only one consumer to a product, sort of the mirror opposite of monopoly.
That was and remains nonsense since consumers had and have choices for OS and for browsers (whereas Apple was not accused of such things even though they forced consumers to take their hardware along with their OS and browser).
The example of coercive monopsony, however, is different, since the producer (in that country's market) has no other choice for consumers by law.
www.zianet.com /ehusman/weblog/2006/02/coercive-monopsony.html   (1243 words)

 AmosWEB is Economics: Encyclonomic WEB*pedia
While the real world does not contain monopsony in its absolute purest form, labor markets in which a single large factory is the dominate employer in a small community comes as close as any.
Monopsony is also comparable to monopoly in terms of inefficiency.
Single-buyer status means that monopsony faces a positively-sloped supply curve, such as the one displayed in the exhibit to the right.
amosweb.com /cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=monopsony   (1814 words)

 Trade: Chapter 100-6: Monopoly/Monopsony Power in Trade
Large importing countries are said to have "monopsony power in trade", while large exporting countries are said to have "monopoly power in trade" As this terminology suggests, the problem here is that the international market is not perfectly competitive.
Similarly, when a country is a large importer of a good we say that it has "monopsony power." A monopsonist represents a case in which there is a single buyer in a market consisting of many sellers.
We say that the country has monopsony "power" because the country may not be the only importer of the product in international markets, yet because of its large size it has "power" like a pure monopsonist.
internationalecon.com /Trade/Tch100/T100-6.php   (1680 words)

 EconEdLink | NetNewsLine | The Economics of Professional Sports: Underpaid Millionaires?
A monopsony is a market in which only one buyer of some resource or input exists.
(Contrast this characteristic of a monopsony with a monopoly: in the extreme case, a monopoly has only one seller of a good or service.) Because a monopsony market is not a truly competitive one, the price that the one buyer pays for any resource or input may often be less than in a competitive one.
Gill and Brajer1 have estimated the level of monopsony exploitation for non-free agents to be between.295 and.574.
www.econedlink.org /lessons/index.cfm?lesson=NN146&page=app2   (1073 words)

 Econ Answer Man on monopsony   (Site not responding. Last check: 2007-10-28)
The monopsony model shows the result when there is only one employer (buyer of labor) in the labor market.
The matter would be more clearly stated this way: the monopsony employer reduces the choices that labor suppliers have down to two--the labor supplier can work for the monopsonist, or not work at all.
To diagram the monopsony labor market, draw the upward slope of the labor supply curve and consider that the firm is not a wage discriminator.
warp6.cs.misu.nodak.edu /econ/econanswerman/econan23.html   (642 words)

 Gapers Block : Airbags : Wal-Mart, Daley & Me
A monopsony is a rare economic condition that is the enantiomer, or mirror image, of a monopoly — basically, a situation where the demand, rather than the supply, is controlled by one entity, because there is essentially only one buyer (that matters).
Ironically, in economics the word "monopsony" most often refers to labor markets, when one employer is the sole "buyer" of labor.
When monopsony conditions exist, they will provide the illusions of advantage for the individual while in reality burdening them with indirect costs, especially in the long run.
www.gapersblock.com /airbags/archives/walmart_daley_me   (1176 words)

 An Economic Welfare Analysis of Protected Monopsony
A protected monopsony is a firm with a state protection of its monopsony status.
It is important to separate the profits and economic welfare loss due to the protected monopsony from whatever possible profits and economic welfare loss which may accrue to the firm from some monopoly position in the market it sells in.
The net loss of the economy due to the monopsony is the area of the pink and lavender trapezoid less the rectangle representing the monopsony profits.
www.sjsu.edu /faculty/watkins/monopswelf.htm   (1226 words)

 Minimum Wages and a Monopsony Employer
A monopsony producer has significant buying power in the market for their inputs, be they raw materials and components or the purchasing of labour inputs.
The standard theoretical approach to the impact of a monopsony employer is that they can use their buying-power to drive down wage rates.
The monopsonist knows that they face an upward sloping labour supply curve, in other words, to attract more workers in their industry, they must pay a higher wage rate – so the average cost of employing labour rises with the number of people taken on.
www.tutor2u.net /economics/content/topics/poverty/minwage_monopsony.htm   (712 words)

 The National Coalition of Mental Health Professionals and Consumers, Inc.
Monopsonies as well as monopolies are a clear violation of the Sherman Anti-Trust Act.
These firms believe a monopsony lawsuit is very worthwhile and are willing to invest many of their own resources in its own success.
The strength of a monopsony lawsuit is that it is both based on good legal theory and that there are substantial facts to prove the case.
www.thenationalcoalition.org /lawsuit.html   (849 words)

 SSRN-Labor Market Discrimination During Post-Communist Transition: A Monopsony Approach to the Status of Latvia's ...   (Site not responding. Last check: 2007-10-28)
This paper explores the feasibility of monopsony as an economic structure supportive of discrimination during transition, using Latvia's ethnic Russians as a case study.
A monopsony explanation requires Russians to have lower labor supply elasticity than Latvians, a condition which estimates for participation probability confirm.
This evidence suggests that lack of integrated, flexible labor markets in Latvia, and the monopsony which results, have supported labor market discrimination against Russians during transition.
www.ssrn.com /abstract=276650   (333 words)

 AmosWEB is Economics: GLOSS*arama
Monopsony is the buying-side equivalent of a selling-side monopoly.
Much as a monopoly is the only seller in a market, monopsony is the only buyer.
While monopsony could be analyzed for any type of market it tends to be most relevant for factor markets in which a single firm is the only buyer of a factor.
www.amosweb.com /cgi-bin/awb_nav.pl?s=gls&c=dsp&k=monopsony   (282 words)

 A Generalised Model of Monopsony
But, the standard textbook models of both perfect competition and monopsony are both implausible, though for different reasons.
The competitive model because it assumes the wage elasticity of the supply of labour to the individual firm is infinite and the monopsony model because it assumes that an employer cannot do anything to raise employment other than raise the wage.
Using this, it is shown how that division between perfect competition and monopsony is not the issue of whether the wage elasticity in labour supply is infinite or finite (as it is usually presented) but whether there are diseconomies of scale in recruitment.
ideas.repec.org /p/cep/cepdps/0499.html   (508 words)

 PinkMonkey.com-Economics Study Guide - 14.4 Monopsony and Exploitation of Labor
Similarly when only one employer is buying labor he enjoys monopsony power in the labor market.
The presence of monopsony causes a lower rate of wages than what the workers ordinarily deserve.
The presence of monopsony has similar undesirable effects such as high price, low level of output, underutilization of capacity of production and loss of consumer surplus.
www.pinkmonkey.com /studyguides/subjects/eco/chap14/e1414401.asp   (598 words)

 Monopsony 3
Although no other firm hires this type of worker, the workers can find a job doing something else for a living.
A profession for which there exists only one employer is called a monopsony.
Since there is no market wage, not only can you choose the employment level, you can also decide what to pay your workers.
www.clt.astate.edu /marburger/monopsony_31.htm   (203 words)

 "Breaking the chain: The antitrust case against Wal-Mart" by Barry C. Lynn (Harper's Magazine)
The ultimate danger of monopsony is that it deprives the firms that actually manufacture products from obtaining an adequate return on their investment.
In other words, the ultimate danger of monopsony is that, over time, it tends to destroy the machines and skills on which we all rely.
Examples of monopsony can be difficult to pin down, but we are in luck in that today we have one of the best illustrations of monopsony pricing power in economic history: Wal-Mart.
harpers.org /BreakingTheChain.html   (5745 words)

 ECO 240 | Tutorial 12a
All the workers hired by the firm have exactly the same skill level.
with monopsony power, w < MRP (remember, w is determined by the labor market supply, it is the lowest wage the last hired worker is willing to accept).
The difference between MRP and w measures the "markdown" in wages (as a percent of the wage rate).
www.ilstu.edu /~mswalber/ECO240/Tutorials/Tut12/Tutorial12a.html   (1039 words)

 Gottheil SG Wages and Employment: Monopsony and Labor Unions
A monopsonist is able to reap a return to monopsony power by hiring workers up to the point where the MRP of labor is equal to the MLC and paying the workers a wage rate read from the labor supply curve, which lies below the MLC.
However, monopsony labor markets are sometimes marked by the presence of labor unions, which bargain with the monopsonist for higher wages, shorter hours, and better working conditions.
A labor union can confront the monopsonist with a horizontal MLC curve and, as a result, capture the return to monopsony power for the workers it represents.
www.swlearning.com /economics/gottheil/wages_and.html   (788 words)

 Judiciary Statement: "Monopsony Issues in Agriculture: Buying Power of Processors In Our Nation
Thus, when discussing monopsony issues, one of the principal concerns is that a buyer with market power may use that power to reduce the quantity that it purchases in order to force down the per-unit price that it pays for a product.
Another potential abuse of monopsony power arises in the area of non-price terms.
Rather than forcing a lower price, a powerful buyer may instead choose to use its power to insist that a seller accept less favorable contract terms than would be negotiated in a competitive market.
hatch.senate.gov /index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=929&Month=10&Year=2003   (746 words)

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