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Is Wal-Mart a Monopsony? Evidence from Local Labor Markets

  • Bonanno, Alessandro
  • Lopez, Rigoberto A.

This paper measures the degree of monopsony power exerted by Wal-Mart over retail workers using a dominant-firm model and data in the 48 contiguous U.S. states for counties where the company operates, presenting for the first time a measure of the company’s anticompetitive behavior. Empirical results show that Wal-Mart’s monopsony power over workers varies significantly across the country, being higher in non-metro and rural counties, particularly in the south. For instance, Wal-Mart’s buying power index in labor markets in rural southern and central states is estimated to be 5% or higher while the impact on northeastern states’ retail wages is negligible.

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File URL: http://purl.umn.edu/51289
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Paper provided by International Association of Agricultural Economists in its series 2009 Conference, August 16-22, 2009, Beijing, China with number 51289.

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Date of creation: Aug 2009
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Handle: RePEc:ags:iaae09:51289
Contact details of provider: Web page: http://www.iaae-agecon.org/
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  1. Gorter, C. & Hassink, W. & Nijkamp, P., 1996. "On the endogeneity of output in dynamic labour-demand models," Serie Research Memoranda 0019, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  2. David Neumark & Junfu Zhang & Stephen Ciccarella, 2006. "The Effects of Wal-Mart on Local Labor Markets," Working Papers 060711, University of California-Irvine, Department of Economics.
  3. Emek Basker, 2002. "Job Creation or Destruction? Labor-Market Effects of Wal-Mart Expansion," Working Papers 0215, Department of Economics, University of Missouri, revised 14 Jan 2004.
  4. Jerry Hausman & Ephraim Leibtag, 2006. "Consumer Benefits from Increased Competition in Shopping Outlets: Measuring the Effect of Wal-Mart," CeMMAP working papers CWP06/06, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  5. Emek Basker & Michael Noel, 2009. "The Evolving Food Chain: Competitive Effects of Wal-Mart's Entry into the Supermarket Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 977-1009, December.
  6. R)chard E. Quandt & Harvey S. Rosen, 1989. "Endogenous Output in an Aggregate Model of the Labor Market," NBER Technical Working Papers 0074, National Bureau of Economic Research, Inc.
  7. Khanna, Naveen & Tice, Sheri, 2000. "Strategic Responses of Incumbents to New Entry: The Effect of Ownership Structure, Capital Structure, and Focus," Review of Financial Studies, Society for Financial Studies, vol. 13(3), pages 749-79.
  8. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
  9. Paul W. Bauer & Yoonsoo Lee, 2006. "Estimating GSP and labor productivity by state," Policy Discussion Papers, Federal Reserve Bank of Cleveland, issue Mar.
  10. Dube, Arindrajit & Lester, T. William & Eidlin, Barry, 2007. "Firm Entry and Wages: Impact of Wal-Mart Growth on Earnings Throughout the Retail Sector," Institute for Research on Labor and Employment, Working Paper Series qt22s5k4pv, Institute of Industrial Relations, UC Berkeley.
  11. Baker, Jonathan B. & Bresnahan, Timothy F., 1988. "Estimating the residual demand curve facing a single firm," International Journal of Industrial Organization, Elsevier, vol. 6(3), pages 283-300.
  12. Emek Basker, 2007. "When Good Instruments Go Bad," Working Papers 0706, Department of Economics, University of Missouri.
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