Wal-Mart and Monopsony


This is going to be a “dead cat bounce”-type of post, but given that the existence of monopsony in the labor market is such a big issue in determining the efficacy of minimum wage legislation (at least in popular press), it behooves us to analyze the monopsony power of the world’s largest employer.

According to the study conducted by Alessandro Bonanno and Rigoberto A. Lopez Wal-Mart has significant monopsony power only in the lowest wage markets in the US, which are the rural south and south-central regions. Unfortunately, this result still cuts both ways. It suggests that targeted interventions for wage subsidies are, indeed, beneficial. However, in the majority of the United States, even the largest employer in the world doesn’t exercise monospony power. Because this is the case, it is likely (as in almost every facet of life) a blanket wage floor is not the ideal solution.

More on this later, when I’m less tired.

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3 thoughts on “Wal-Mart and Monopsony

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