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Long-run Equilibrium under Pure Monopsony

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  • Michael Bradfield

Abstract

This note extends the conventional short-run comparison of perfectly competitive and monopsony markets to show that the long-run monopsony equilibrium implies a greater divergence from the competitive results than is true in the short run. The conditions necessary to have a "pure" monopsony, with power in only the labor market, are developed and generate a constant marginal revenue product of labor equal to the competitive wage. This leads the monopsonist to cut wages and labor inputs further in the long run and also forms the upper bound on the bargaining range for a union negotiating with a pure monopsonist.

Suggested Citation

  • Michael Bradfield, 1990. "Long-run Equilibrium under Pure Monopsony," Canadian Journal of Economics, Canadian Economics Association, vol. 23(3), pages 700-704, August.
    • Handle: RePEc:cje:issued:v:23:y:1990:i:3:p:700-704
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    Cited by:

    1. Boris Hirsch & Marion König & Joachim Möller, 2013. "Is There a Gap in the Gap? Regional Differences in the Gender Pay Gap," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(4), pages 412-439, September.
    2. Boris Hirsch, 2009. "The Gender Pay Gap Under Duopsony: Joan Robinson Meets Harold Hotelling," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(5), pages 543-558, November.
    3. Bonanno, Alessandro & Lopez, Rigoberto A., 2012. "Wal-Mart's monopsony power in metro and non-metro labor markets," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 569-579.

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