In a recent post at the appallingly misnamed ProMarket blog the blog of the Stigler Center at the University of Chicago Booth School of Business — George Stigler is rolling in his grave… , Marshall Steinbaum keeps alive the hipster-antitrust assertion that lax antitrust enforcement — this time in the labor market — is to blame for… well, most? This will probably come as news to the agencies themselves, whose Horizontal Merger Guidelines devote an entire albeit brief section section 12 to monopsony, noting that:.
Mergers of competing buyers can enhance market power on the buying side of the market, just as mergers of competing sellers can enhance market power on the selling side of the market. Market power on the buying side of the market is not a significant concern if suppliers have numerous attractive outlets for their goods or services.
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However, when that is not the case, the Agencies may conclude that the merger of competing buyers is likely to lessen competition in a manner harmful to sellers. In that document, the agencies state that. The U. Steinbaum, of course, cites only the first sentence. And he uses it as a launching-off point to attack the notion that antitrust is an improper tool for labor market regulation. But if he had just read a little bit further in the very short document he cites, Steinbaum might have discovered that the US antitrust agencies have , in fact, challenged the exercise of collusive monopsony power in labor markets.
As footnote 19 of the OECD submission notes:. Although employment is not a relevant policy goal in antitrust analysis, anticompetitive conduct affecting terms of employment can violate the Sherman Act. See, e. Emphasis added.
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Steinbaum instead opts for a willful misreading of the first sentence of the OECD submission. But what the OECD document refers to, of course, are situations where two firms merge, no market power is created either in input or output markets , but people are laid off because the merged firm does not need all of, say, the IT and human resources employees previously employed in the pre-merger world.
What he does say — as he must in order to bring antitrust enforcement to bear on the low- and unskilled labor markets e. Employers can have that control [over employees, as opposed to independent contractors] without first establishing themselves as a monopoly—in fact, reclassification [of workers as independent contractors] is increasingly standard operating procedure in many industries, which means that treating it as a violation of Section 2 of the Sherman Act should not require that outright monopolization must first be shown.
I get why he needs to try to make this move: As I intimated above, there is probably not a single firm in the world that hires low- or unskilled workers that has anything approaching monopsony power in those labor markets. Moreover, how on earth is hiring independent contractors evidence of anticompetitive behavior?
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Firms are faced with a binary choice: hire workers or independent contractors. Which is a point the OECD submission made again, if only Steinbaum had read beyond the first sentence… :. First, a full accounting of employment effects would require consideration of short-term effects, such as likely layoffs by the merged firm, but also long-term effects, which could include employment gains elsewhere in the industry or in the economy arising from efficiencies generated by the merger. Measuring these effects would [be extremely difficult.
Monopsony and antitrust enforcement; 8. Monopsony in action: agricultural markets; 9. Monopsony in action: the NCAA; Monopsony in action: physician collective bargaining: monopoly or bilateral monopoly; Final comments.
Review Text 'Blair and Harrison provide a clear, approachable, and useful analysis of the economics of monopoly on the buying side of markets, a subject that is much too frequently both overlooked and misunderstood. The authors also include a comprehensive, policy-driven analysis of bilateral monopoly and show how monopsony power is exercised in a number of markets, including agriculture, sports leagues, and medical services.
This excellent, well-written, and timely book should be on the shelf of every industrial organization economist as well as every competition or antitrust lawyer. Review quote 'Blair and Harrison provide a clear, approachable, and useful analysis of the economics of monopoly on the buying side of markets, a subject that is much too frequently both overlooked and misunderstood. This book explores the issue in depth and also discusses many examples that put the topic easily within the grasp of readers who do not have a background in either law or economics.
It is unquestionably the best single source for research on this topic.
[PDF] Monopsony in Law and Economics [Read] Online
Hylton, Boston University 'By putting together in a single location and further organizing and developing what we know about monopsony, Blair and Harrison have not only produced a very interesting book, but also done a great service to the profession. This unique monograph includes a detailed treatment of relevant antitrust rules and case law, a thorough but very accessible treatment of relevant economic theory, as well as numerous examples and details of specific industries in which monopsony issues arise in practice.
I am sure it will become the standard reference on monopsony, and that I will refer students of economics and antitrust to it for years to come. It canvasses the current law on monopsony, taking account of the Supreme Court's provocative case on predatory buying and other recent developments. It contains timely new chapters examining agricultural markets, the NCAA, and physician collective bargaining.
The authors' message is that monopsony is more prevalent than many think and not as well understood as it should be.
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Lucid, comprehensive, and insightful, Monopsony is the definitive treatment of a difficult and overlooked area. It has no good substitute. Serious students of antitrust law and economics will find it indispensable. Lopatka, Pennsylvania State University and the Dickinson School of Law "Blair and Harrison provide a clear, approachable, and useful analysis of the economics of monopoly on the buying side of markets, a subject that is much too frequently both overlooked and misunderstood.
Hylton, Boston University "By putting together in a single location and further organizing and developing what we know about monopsony, Blair and Harrison have not only produced a very interesting book, but also done a great service to the profession. About Roger D. Blair Roger D.
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Blair is Walter J. Matherly Professor of Economics at the University of Florida, where he has taught since He received his Ph. He is also the editor or coeditor of many volumes, including Proving Antitrust Damages. Professor Blair has written more than articles or chapters in professional economics journals, law reviews, and books.
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Jeffrey L. Harrison is the Stephen C. He received his MBA and Ph.