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Duality in the analysis of monopsony in the labor market

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  • Mira Krpan

    (University of Zagreb)

Abstract

Duality in microeconomic theory refers to the description of the same economic phenomenon by different sets of variables: quantities and prices. It relies on the price-taking behavior of economic agents. This paper takes the challenge of delivering a comprehensive analysis of monopsony in the labor market from a duality perspective. The standard monopsonist's short-run normalized profit maximization model is enriched by the introduction of the non-wage determinant of the labor supply which takes the role of the price of the newly introduced pseudo labor. The pseudo production and pseudo cost functions are identified as dual functions of the short-run normalized profit function of monopsonist for the given labor supply function. Duality as a way of thinking enables an elegant derivation of a version of Hotelling’s lemma in the monopsony case. Finally, comparative statistics reveal interesting economic relations, important for the empirical investigation.

Suggested Citation

  • Mira Krpan, 2023. "Duality in the analysis of monopsony in the labor market," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 31(3), pages 975-990, September.
    • Handle: RePEc:spr:cejnor:v:31:y:2023:i:3:d:10.1007_s10100-022-00828-y
    DOI: 10.1007/s10100-022-00828-y
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    References listed on IDEAS

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    1. William M. Boal & Michael R. Ransom, 1997. "Monopsony in the Labor Market," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 86-112, March.
    2. Orley C. Ashenfelter & Henry Farber & Michael R. Ransom, 2010. "Modern Models of Monopsony in Labor Markets: A Brief Survey," Working Papers 1223, Princeton University, Department of Economics, Industrial Relations Section..
    3. Ilko Vranki? & Mira Krpan & Jasminka ?ohinger, 2019. "Economic Analysis of Technology and Properties of Legendre-Fenchel Transformations," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 8(2), pages 159-183, December.
    4. Ashenfelter, Orley & Farber, Henry S & Ransom, Michael R., 2010. "Modern Models of Monopsony in Labor Markets: A Brief Survey," IZA Discussion Papers 4915, Institute of Labor Economics (IZA).
    5. Joan Robinson, 1969. "The Economics of Imperfect Competition," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-15320-6.
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    Cited by:

    1. Janez Povh & Lidija Zadnik Stirn & Janez Žerovnik, 2023. "60 years of OR in Slovenia: development from a first conference to a vibrant community," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 31(3), pages 681-690, September.

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