WalMart: Monopsony Destabilizes Economies as Much as Monopoly Does

Warsted

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Tuesday December 10, 2013 · 7:56 AM PST

2013/12/10 · 07:56

Author's Note: Some 30 years ago, as an undergraduate studying Economics, I took a course in Industrial Organization and Public Policy. I have been mulling some of the ideas I first encountered in that course ever since. The following is the product of just such mulling.

Many Americans are at least passing familiar with the 19th-century rise of corporate monopoly power in this country to set prices when selling and the subsequent development of the anti-trust regulations and legislation that came about to limit the power of monopolies. Far fewer Americans, however, know about the flip side of monopoly: monopsony. Put bluntly, a monopolist controls the prices of goods and services it sells. By contrast, a monopsonist controls the prices of goods and services it buys.

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