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Monopsony and two‐part tariffs

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  • Roger D. Blair
  • Christina DePasquale

Abstract

We adapt the traditional model of two‐part tariffs by a monopolist to the case of monopsony. We show that the resulting offer is that the seller pays its producer surplus as an access fee in exchange for the buyer's promise to buy everything that the seller wants to sell when price equals marginal cost. In addition, we show that this is equivalent to the surplus that the buyer captures with first‐degree price discrimination as well as an all‐or‐nothing offer. We also extend this analysis to the case of uncertainty for a risk‐averse monopsonist.

Suggested Citation

  • Roger D. Blair & Christina DePasquale, 2020. "Monopsony and two‐part tariffs," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(5), pages 730-734, July.
    • Handle: RePEc:wly:mgtdec:v:41:y:2020:i:5:p:730-734
    DOI: 10.1002/mde.3132
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    References listed on IDEAS

    as
    1. E. Zabel, 1970. "Monopoly and Uncertainty," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 37(2), pages 205-219.
    2. Blair,Roger D. & Harrison,Jeffrey L., 2010. "Monopsony in Law and Economics," Cambridge Books, Cambridge University Press, number 9780521746083, September.
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    6. Roger D. Blair & Christine Piette Durrance, 2014. "Group Purchasing Organizations, Monopsony, and Antitrust Policy," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 35(7), pages 433-443, October.
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    Full references (including those not matched with items on IDEAS)

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