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Blair, Roger D.; Haynes, Jessica S. --- "Monopsony, Monopsony Power, and Antitrust Policy" [2012] ELECD 222; in Elhauge, R. Einer (ed), "Research Handbook on the Economics of Antitrust Law" (Edward Elgar Publishing, 2012)

Book Title: Research Handbook on the Economics of Antitrust Law

Editor(s): Elhauge, R. Einer

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848440807

Section: Chapter 9

Section Title: Monopsony, Monopsony Power, and Antitrust Policy

Author(s): Blair, Roger D.; Haynes, Jessica S.

Number of pages: 19

Extract:

9 Monopsony, monopsony power, and antitrust
policy
Roger D. Blair and Jessica S. Haynes* 1




I INTRODUCTION

For the most part, antitrust enforcement has focused on monopoly problems ­ both
real and imagined. Whether it was structural monopoly, collusive monopoly (overt or
tacit), monopoly leveraging, market foreclosure, or trends in concentration, the focus
has largely been on the selling side. Recently, however, some attention has shifted to the
buying side and, therefore, to problems of monopsony. Monopsony is the flip-side of
monopoly: instead of having a single seller, we have a single buyer in the market. As with
pure monopoly, pure monopsony is rare, but its economic equivalent, a buying cartel,
is not. Allegations of collusion among buyers have been raised against antique dealers,
Major League Baseball owners, the NCAA, hospitals, and bidders for timber harvesting
rights, among others. As an antitrust awareness of monopsony problems has grown, it is
useful to examine the economics of monopsony. In section II of this chapter, we present
and explain various models of monopsony: pure monopsony, collusive monopsony,
dominant buyer, and oligopsony. We include a discussion of the social welfare losses
associated with monopsony. In section III, we adapt the familiar Lerner Index to monop-
sony and discuss its significance. In section IV, we turn our attention to antitrust policy.
Some final remarks are provided in section V.


II MODELS OF MONOPSONY

In this section, we present and explain structural and behavioral variants of monopsony.
Profit-maximizing behavior will also be presented along ...