Wal-Mart’s Monopsony Power in Local Labor Markets
This paper measures the degree of monopsony power exerted by Wal-Mart over retail workers using a dominant-firm model and data on contiguous U.S. counties where the company operates, presenting for the first time a measure of the anti-competitive behavior of the company. Empirical results show that Wal-Mart’s monopsony power over workers varies significantly across the country, being higher in rural counties, particularly in the south. For instance, Wal-Mart’s buying power index in labor markets in rural southern central states is estimated to be 5% or higher while the impact on northeastern states’ retail wages is negligible.
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